You would think it would be easy to come up with a perfect price for a home that will be going on the market for sale. For an agent, it usually is easy. We do a Comparative Market Analysis (CMA) and come up with a price that will bring the buyers. The price is usually a bit higher then fair market price (room for negotiating), and is backed by evidence that makes perfect sense why that house is the price it is.
Buyers these days are very savvy. On their own with Internet or with an agent, after visiting a bunch of homes, they know what a house price should be. They get a feel of the value of what you are getting and the price range it should be in. Many times I’ve been with buyers and right away after walking into a place that is over priced, I get the high-eye-browed look, “what are these sellers thinking?”
What sellers are usually thinking is:
I have to re-coup my money that I put into renovations
I’ve lived in my house for years and it’s the best house around
My neighbour who has the exact same place has their place up for much more then what you’re suggesting (and it’s still on the market…hmmmm)
Sellers become emotionally attached to their home. There are many times when I present them with a selling price and they are insulted and become defensive. They’ve put their life into their home; their kids grew up there…
I understand. However the buyer, even if they fall in love with the place is rarely going to pay more then it’s worth. They are most times thinking, “re-sale value” and “getting their bang for their buck”. Besides we are in a market now with more homes for sale then buyers. Buyers are taking their time picking and choosing.
Statistically speaking homes sell at a higher price when they start at fair market value. When they are overpriced, they may still get all the buyers, however the house sits on the market. After months gone by, the house price drops and then the buyers think, “what’s wrong with the place” and “I’m going to low ball the price because they must really be ready to sell and desperate.”
So why is it that we need to price our homes correctly? To sell it quickly and get the best price possible.