For those of you who listen to my weekly radio show “Stage It To Sell It” on Saturday at 4 PM on AM Radio Channel 830, you already know that Price is one of the Three P’s to selling your home (Price, Product, and Presentation). While some would argue that Price is the most important, I believe they all play a key part in selling your home faster and for more money. However, in this article we will take a look at what happens when you improperly price your home.
Why is Properly Pricing Your Home so Important?
To put this in context, let’s start with your Realtor selection process. Listening to me on the radio, you know that you must interview more than one Realtor. You also know that it is critically important that you make me the second Realtor you interview as I will put things in a different perspective than your traditional Realtor.
Now, let’s say you did not listen to my show or decided to go with your sister’s friend to represent you in the biggest financial transaction of your life. Okay. Now, to impress you, and make sure she gets the listing, she tells you your home is worth a great deal and probably a number that you really like. You get excited and bring your product (your home) to the market, at that inflated price.
If it is improperly priced when it initially comes to the market you will experience very few showings and probably no offers. The chart below shows you that if it is over market value fewer people will look at it and if it is under-priced (a rare occurrence) it will attract many buyers. The key is to properly price it at market value to generate the most buyers.
You have to understand that the rest of the Realtors that are actively involved in the market know very well what your home is worth. They were not trying to list your home, so they are looking at it very objectively and know how it fits with comparable sales in the current market.
The Law of Diminishing Returns
Now that we have established that fewer buyers will even look at an overpriced home, there is another long term effect to choosing the first Realtor that overpriced your home. This effect is called The Law of Diminishing Returns (pretty neat, huh). The picture below shows how time erodes the potential sale price of your home.
In simple, non-realtor terms, the longer it is on the market the less you are likely to receive for it. I could drag out a lot of statistics to prove this to you, but just take my word for it. If it is overpriced to start with it will not sell. The longer it sits, the lower the price you will ultimately receive for it. If it sits long enough it will even fall below market value as the market will perceive that there is something wrong with your product and you will only receive below market offers.
If you would prefer to receive the very large bag of money above, please call me for a free, REAL, third party evaluation of your home. I will also explain that the products (your home) receiving the largest bag of money are always Professionally Staged and I will do that FOR FREE when you list with me.