Pricing Pitfalls
A common mistake when selling your home is pricing pitfalls. For the last few years, it has been a sellers market. With a plethora of buyers, low interest rates and low inventory, a perfect storm was created that pretty much allowed sellers to get whatever, or more, than they set that price to be. But real estate is a cycle and the sellers market is starting to soften. Interest rates are more than double what they were a year ago which has priced many buyers out. Homes are staying on the market longer, we are seeing price reductions again and while inventory is lower than normal, there is still a strategy for selling a home. Pricing your home correctly in this shifting market is part of the strategy. Sellers have a lot of info at their fingertips but can still make mistakes when pricing. Here are a few pitfalls to avoid.
Sellers can use emotion based pricing. This can cloud over logic and make sellers ignore fact based pricing. You can love how your home looks and not take your broker's advice on things that need to be changed or neutralized to appeal to a wider range of buyers.
Sellers think it's OK to price based on what they need from the sale. Yes, sellers do need to calculate what they will need from the sale to buy their next home. Calculate this and see if that flies with the current market value. Sometimes it isn’t the right time to sell. Buyers also have a lot of info available at their fingertips and they can see what an owner paid for their house and what improvements have been made. They aren't going to be willing to pay the incorrect asking price based on what the seller “needs”.
Sellers use Zillow and other online estimates of their homes value. Once again–all the info is out there but must be used with good judgment. Sellers are always willing to argue for using that Zillow estimate when it is higher than their broker's suggestion but I have never had a seller tell me the price needs to be lower because my suggested price was higher than the Zillow number. The Zillow algorithm can get it close in many cases but still the most accurate way to price a home is having a local broker do a market analysis using current area sales.
Sellers sometimes want to put their house on the market to “test the waters” and have no urgent need to sell. Nothing is more frustrating than trying to market a home that the seller doesn't really care about selling. But again, the info is out there. Sellers can see how long the house has been on the market. A stagnant listing or one that goes on and off the market raises suspicions with buyers.
Sellers want to inflate the price so they have room to negotiate. Sellers know what their home is worth. Over pricing the house by even as little as 5% can scare buyers away. Buyers are willing to pay what sellers what their homes are worth but don't want to get in an emotional negotiation on a home they think will not have a positive outcome.
Sellers had to pay a high list price. Over the past few years, sales prices often mirrored or exceeded list prices. Unfortunately the real estate market goes up and down. Even if your home appraised for the sales price at the time you purchased, a fair price for the house may be less in today's market. Sometimes sellers are lucky but sometimes they aren't and have to buy high and sell low or wait it out.
Sellers ignore the true comparables to their home. The market analysis or CMA done on a home compares it to similar homes in close proximity. They will need to be of similar square footage, style, level of update/age, acreage and amenities. At least 3 comparables are used. Sellers sometimes want to refute the comps, finding reasons theirs is superior. But in the end, that large added mega deck, pool or extra pricey metal roof a seller installed may not add equal value to the home. Even homes that have recently sold in the seller's neighborhood are not the most accurate comparable if they are twice the size or on a double lot. In the end, when a buyer finances, the bank will require an appraisal and this actually determines the amount a buyer can get a loan for. Brokers want to come close to that number with their CMA so that sellers aren't expecting a sale price that is unrealistic.
These are some of the main reasons sellers overprice their homes. Markets can turn quickly. Pricing needs to be done at the time you are ready to list and can change in a matter of months so have it reevaluated if it has been longer than 30 days. Work with a reputable local listing agent that knows the market conditions and sellers can avoid some of these pricing pitfalls.
Written by Polly Leadbetter
Broker/Owner
Engel & Völkers Foothills
Preparing to Sell your Home
Spring is just around the corner and with the warmer weather comes more homes on the market and people are preparing to sell their homes. Blooming trees, fresh mulch and pretty green grass do a lot for your homes curb appeal on the outside. But there are also many other things to do inside and out to get your house ready to sell. Preparing to sell your home means tackling those repairs, decluttering and staging your home to get the best price in the minimum amount of time. Living in a home, you can tend to live with minor issues but a buyer sees those small things as a sign the house hasn’t been maintained. Dripping faucets, squeaky floors and scuffed up walls and baseboards can all be fixed relatively easily. Larger items, like a new roof or HVAC, need professional service. All those do it yourself shows have led people to think they can fix it all but even if repairs or updates seem simple, professional contractors will do the job correctly and lead to less issues in the long run.
One of the easiest ways to make your home more presentable is to declutter. Cleaning out closets and cabinets is less for you to move and lets buyers see the available storage and space in the house. Consider renting a storage unit if you need to store larger furniture and boxes. Remember to organize storage areas in the home like pantries, attics, unfinished basements and garages. While it is great to have storage in the home, don’t leave items piled to the ceiling or thrown in a heap.
Deep cleaning is a must. Have the carpets cleaned and deodorized. Vacuum all the pet hair off the couch. Regrout the tub and shower for a fresh look. And remember that once you get the house cleaned, it needs to be maintained that way throughout the selling process. Daily chores like putting away dishes and making beds needs to be done so your house is ready for a buyer to see.
Fresh paint in neutral colors will make the spaces look clean and rooms look larger. Focus on essential rooms that show the most wear and tear like entryways, kitchens and living areas where you spend the most time. Depersonalizing your spaces can help a buyer visualize their items in the space. Make rooms more neutral by removing personal items like photos, souvenirs, sports memorabilia and religious symbols. I don’t like houses completely devoid of photos because it does lack a homey feel but limiting personal items does make it feel less cluttered.
Exterior condition sets the tone for the buyers experience. Always paint or refinish your front door. Nothing says Welcome more than a presentable entry. Add seasonal flowers and a new welcome mat to make a good first impression. Make sure house siding , roofs and windows are in good condition. Check drainage around the house to make sure there are no loose downspouts or areas of erosion that need attention. Trim those overgrown bushes and pressure wash the sidewalk and decks.
Before taking on these projects it is also helpful to have a real estate professional take a look at your home. They can also advise you on items they see that may need repair or updates that will add value to your home. They might also suggest having a pre inspection done by a licensed home inspector. This will let you know if there are any major items that need to fixed or disclosed to potential buyers.
I know all these preparations take time, money and effort to get your house ready to sell but buyers will notice and you’ll benefit with an easier sale process.
Written by Polly Leadbetter
Broker/Owner
Engel & Völkers Foothills