I have been practicing real estate for years now, and I have seen buyers and sellers make all sorts of mistakes over those years. Sellers are known to make certain mistakes, and so are buyers. I will be talking about the common mistakes buyers make in
a separate blog entry, but for now, I want to focus on the mistakes that sellers make, and one, in particular, that is perhaps the most damaging, and sadly, the most common. What is this egregious error that so many sellers commit, despite the best advice
of real estate professionals? Pricing their property too high. There is nothing that will hurt your overall sales efforts more that this costly mistake.
Lots of agents like to boast about the quality of their marketing abilities, but the truth of the matter is and what many of them never tell you is that the single most important aspect of any successful marketing campaign is to get the price right. This
is not always easy to do, and this is what a seasoned real estate professional can help you with. Regardless, it pays to get this part of the process right.
Why do sellers decide to price their home too high? Well, there can be a multitude of reasons really. Some of them include wanting to hit an arbitrary target amount that is in a seller's head for whatever reason. This imagined amount will provide them
with enough funds to achieve a specific goal perhaps. Maybe the amount has some symbolic power and represents a perceived acceptable return on a perceived investment, you know, payback for that excruciating kitchen renovation 3 years ago perhaps.
Another reason that I hear from sellers often is that they prefer to start high as they figure buyers will work them down in price - setting the price higher gives the seller a seemingly wider margin of negotiation in their mind. This, in the seller’s
mind, provides more imaginary money to "give up" to a buyer in a hard-fought negotiation. My use of the word imaginary to describe these funds is purposeful, and I will explain this more fully a little later in this blog.
The issue is all of these assumptions betray an unawareness as to how the process works and the basic psychology that buyers approach the process of purchasing a home with. A seller must remember that they are not trying to sell a house so much as trying
to attract a buyer and that all of his or her thoughts about pricing and why their house should be worth a certain amount does not matter in the slightest. That’s right – it does not matter. Don’t focus on the house so much – focus on attracting the buyer
and only look at the house as a tool to do just that. The process of selling a home is not about the house, it is about persuading the potential buyer to act. This is the very important component that sellers miss so very often.
Buyers are not only looking at your house, but they are also looking at others that offer similar square footage, location quality, condition, bedroom/bathroom count, and so on. Your home is a commodity. What sellers must keep in mind is that buyers don’t
have to buy your house. They have choices and in order for any sales effort to be successful, we must convince a buyer that they want your house. That they want it more than you do as a seller, and more than the neighbor’s house around the corner. This
is what staging, professional photography, sprucing the home up, and making small repairs is all about…appealing to potential buyers as much as possible. If you are not able to appeal to them, your efforts will never be successful, and the price is a
large part of that appeal. If you value your home too high, and buyers decide that it is priced too high, you are essentially “buying” your house back and you will end up keeping that house. It is important to realize that collectively, buyers set prices,
One more final topic that is worth mentioning is that when a house is put on the market, the clock is ticking, and time is your worst enemy as a seller. If you are not successful in selling your house within 60-90 days, your house will grow stale in the
eyes of buyers who are constantly looking for what is new to the market, and you will be relying on buyers who are just starting their search and just entering the market because they are the only ones who may not have seen your house. And when these
buyers come across your home and see that it has been on the market for so long, the natural thought is to wonder why no other buyer wanted it in such a long period of time, resulting in a certain devaluation of your home the longer it sits on the market.
This makes your sales effort more difficult, and the house will likely sell for a lower price than it otherwise would have. Buyers think that if no one else wanted it in 90 days, they probably won’t either. It is human nature to want what others want,
and if it is perceived that no one wants your house, well, that isn’t going to help the effort to nurture that appeal from buyers that I talked about earlier.
Finally, my reference to the “imaginary” money that I mentioned earlier, it doesn’t really make sense to set a price above market to give yourself negotiating room, because that is based on the assumption that a buyer will look at your overpriced home
and decide that they want to get into a negotiation with you in an effort to get the price down, rather than simply move on to the next house. Many sellers ask too much for their home and forget about the need to first appeal to buyers. Is your house
really more desirable than any others in your neighborhood for a slightly higher price? That is precisely what it would take for a buyer to take the time and energy to engage with you on a lower offer instead of just moving on to a neighboring house that
is similar but offered at a lower price. The only thing you are doing as a seller in these cases is helping to sell your neighbor’s home as you try to get that imaginary money.
For more information or for help determining the best price to set your home for a successful sale, contact me for a complimentary in-home consultation.