Should You Start Out with a HIGH Listing Price?
With all the recent changes in the real estate market, there are more sellers competing for fewer buyers. With this in mind we feel that it's important to dispell a certain real estate "myth".
Price the house high and then you can lower it. It's not important what it starts out at because it can always be lowered later.
This is a "myth" many homeowners believe.
Many homeowners believe this.
When you list your house you may feel that you'll list it high and give yourself room to come down. That could be a very big mistake. Be realistic and list it no higher than the going real estate market in your neighborhood, unless there's an extremely compelling reason your house is worth more than the going real estate market.
The target that most people don't realize they're shooting as is the mind of their real estate agents. It's not the signs, the newspaper ads, the magazine ads, or the internet that sell most houses, it's the real estate agents. Check with your friends and neighbors who've recently bought or sold a house and ask them if they sold/bought it themselves or if they had help from a real estate agent.
If you think you can stick a sign in your yard, run an ad in the paper and set up information to sell your house on the internet and get help without the help of a real estate agent then the price you list your house for is still important.
Most people will make a judgement of one kind or another the first time they see a house. They don't usually check back to see if the price went down, unless there's something very compelling that draws them back to that house. If they think the price is too high they move on. You only get one chance to make a first impression.
There is a major myth that most buyers come to your house because of various types of advertising. In most markets the majority of people who see a house are brought to look by a real estate agent.
If your house is priced too high there's only one reason an agent will bring people to see your house and that's to sell them another house. Once they've seen your house the other houses in the right price range will seem more reasonable.
The agents check the new listings on a constant basis. There are so many houses to look at that keeping track of all the houses is next impossible, so the agents look at the new listings, first. You house will get the most attention whewn it's first listed. The agents will want to come out and look at it and see where it fits in with the other houses. They will in many instances make a trip by to see the house and see what condition it's in and whether or not it justifies the price you're asking. The new listings are usually circulated on hot sheets and identified by the MLS as "new". A lot of attention is placed on the new listings, especially by the agents, both trying to sell the house and looking for specific houses for their clients.
Hardly anyone buys the house in the real estate ad.
As a result, you need to get agents interested in your property, and this is where your listing agent comes in...and why a good listing agent is extremely important. The listing agent gets buyer's agents looking at your home.
Those agents have clients who called in on other properties.
Buyer's agents are not swayed by advertising. They look at the needs of the client, where the client wants to live, location, condition, and other details of the property...
And most importantly, price.
With agent's looking at newly listed homes so aggressively, a properly priced home gets attention. It's important to get the real estate agents attention early or they may not come back and look again.
An overpriced home gets passed over.
You may be willing to negotiate, but when people look at two prices they don't see one as more negotiable than the other, they just see the price. Buyers aren't thinking in advance about how much you are willing to negotiate. They are comparing your asking price to other asking prices.
Plus, when your house is new on the market, you may not be willing to negotiate as much as you will later, once you've realized your error. Keep in mind that statistics show, quite often, the first offer is the best offer.
So what happens if you overprice in the beginning and get more realistic later?
You don't have all those important Buyer's Agents looking at your listing because it is NEW. A price reduction later in the listing cycle often gets overlooked. It is just one of many listings, not one of a few new listings. The later your house becomes a reasonable price the more buyers who might have been interested have already quit looking for one reason or another.
The longer your house has been on the market the more the attitude and belief that you are desperate and the lower the offers get.
As time passes, you could actually become desperate to sell because you've accepted a new job or because you have already bought a new home.
That is a recipe for receiving lowball offers, so you could end up selling for less than if you had priced the home correctly in the first place.
Agents know this stuff, but many sellers still mistakenly believe they should "price it high" because they can lower the price later, if necessary.
That is not the best strategy.