10 Home Pricing Fairy Tales

Everyone wants top dollar for their home. Everyone wants their home to sell fast. Realtors want those same things for every home we list. To achieve this goal, we need to "fact check" some long standing home selling myths.

MYTH 1:

If I price high, a buyer who loves my home will eventually come along and pay that price.

The only place this happens in is the hopeful dreams of home sellers. In reality, any buyer's broker will carefully research area homes and tell their client when a home is overpriced. There is rarely a home so unique that no other home could come close to its appeal. Therefore, buyers will move on and an overpriced home will linger on the market causing speculation about what is wrong with it. It's hard to recover from that position.

MYTH 2:

I want to price high to leave "negotiating room."

Every seller wants top dollar for their home. However, overpricing isn't the way to get it. At worst is it could just leave you empty-handed, especially when your listing grows stale and buyers start to wonder what’s wrong with it. Buyers and their agents will steer clear of your property and visit alternate homes listed at a fair market price.

Good Realtors understand that negotiation is important in real estate, so trust their experience. They will price your home appropriately from the beginning, but will make sure there’s enough wiggle room so you can still get what you want out of the sale.

MYTH 3:

I got a fast offer, so I've priced too low.

Many sellers who get a quick offer wonder whether they should have asked more or think their Realtor “gave their home away” because it sold too quickly. But here's the reality: getting an offer (or offers!) in the first few days most likely means your home was priced accurately and competitively, which attracted multiple buyers. 

MYTH 4:

If I wait, a better offer will come along.

You get an offer after the first showing and think, if I wait, other buyers might cough up even more money for my beloved home. Fantasies of potential bidding wars can make you want to sit tight. Don't do it. There's an old adage that your first offer is your best offer. Long-time Realtors have see this proven true time and again. The longer your home stays on the market, the worse the offers often get. Or maybe no other offers at all. That's because homes sell for the most money when they're on the market less than 30 days. According to the NAR 2018 Profile of Home Buyers and Sellers, recently sold homes were on the market for a median of three weeks. When a home is taking a long time to sell, buyers will start to wonder what is wrong with it.

MYTH 5:

I can price at what a Robo-Estimate says it's worth.

Be wary of using any home value estimate tools you find online. The numbers they give can be inaccurate since they're achieved solely with a computer. No human has assessed your home and taken into consideration any of its special features, as well as prices of surrounding sold properties. Many home estimates go well above or under the home’s real market value. Always trust your Realtor or a professional appraiser over robo-estimates.

MYTH 6:

I can add every dollar ever spent on my home to the listing price.

You may have remodeled your kitchen, added a master bedroom, or replaced your garage door. But don't think that the money you spent making these renovations will be 100% recouped when you sell. Keep in mind that while some changes provide partial return on investment, you won’t get back the whole amount. Particularly if the expenditure was on maintenance rather than improvements. There are some renovations that can actually limit your number of buyers, such as a swimming pool.

To get an idea of which upgrades yield the biggest return on investment, ask your Realtor to do a Cost Versus Value assessment before you make the renovation. You might be surprised. For instance, you can expect to get back only 56% of the costs of an upscale bathroom remodel. Meanwhile, the projects with the biggest return include a garage door and entry door replacement.

MYTH 7:

My Realtor might price too high to get a better commission.

Most Realtors are paid a percentage of a home's selling price. However, this commission is divided 4 ways between: that Realtor, his or her parent firm, a buyer's broker and his or her parent firm. Even with weeks or months of showings and marketing expenses, no Realtor would lose a potential sale just for the sake of a few hundred dollars. For example, the difference in commission between a $300,000 house and one that's $310,000 is about $150. Trust your Realtor because they’re the one who knows the market, and can price at the correct market value. 

MYTH 8: I can start high and lower my price later.

Sorry, but overpricing your home isn't easily fixed just by lowering it later on. The reason: Homes that have lingered on the market for months—or that have undergone one or more price reductions—make buyers presume that something must be wrong with it. As such, they often steer clear, or lowball, thinking you are desperate to sell.

So price your home appropriately from the beginning for your best shot at having a quick and easy sale.

MYTH 9:

If I price low, I won't make as much money.

Sellers are often leery of pricing their home on the low end. But as counterintuitive as this seems, this strategy can sometimes pay off big-time, when market conditions are right.  Here's why: Low-priced homes drum up tons of interest, which could result in a bidding war that could drive your home's price past your highest hopes. Your Realtor will know when a market is ripe for such a strategy.

MYTH 10:

I can set the price using an old appraisal.

Sellers sometimes have an appraisal from when they bought or refinanced their house. That may seem like a logical place to start to price your home. It's not!

An appraisal assigns your home a value based on market conditions as of a specific date, so it becomes old news very quickly. In fact, lenders typically won’t accept appraisals that are more than 60 days old. Good brokers do their homework for the correct value of your home right now. 

What is the perfect price for your home? Answer - The price that brings in the most money in a reasonable length of time. And that price comes from an experienced Realtor's careful comparisons with comparable sold homes within very recent history. And that is no fairly tale.

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