Seller Beware!
Further to our previous blog post (The Search for the Correct Price), here are 5 reasons not to overprice your home.
Regardless of market conditions, there will be homes on the market that are priced at ambitious numbers. Those sellers are likely focussed on their theoretical windfall rather than the potential damage this approach can cause.
So, let’s talk about it.
248 Anytime Crescent goes up for sale. Most would agree it should be priced in the $725-750,000 range. In a moment of misguided optimism, the sellers decide to ‘try’ $829,900. After all, (wait for it), you can always come down, but you can’t go up!
Four months have now passed. The For Sale is doing its best, but it’s showing some rust and keeps leaning over when the slightest westerly breeze blows.
Here are 5 reasons not to take this approach.
Reason #1 – The first impression
When your home hits the market on day one, you have a brief window where you garner the widest range of attention. Think of the opening weekend of a new blockbuster movie. It’s hard to get tickets as people clamour to get a seat. Four weeks later and you can go to pretty much any screening you’d like.
A home that presents beautifully and has magazine worthy photography will struggle to get bums in the seats if it is priced 10% above market value.
Reason #2 – Buyers will ignore you
After driving past your For Sale sign, or swiping past your home on their phone, it will be increasingly more difficult to get that buyer's attention.
As time goes on, you’ll need to reduce the price by ever larger amounts if you really want to get their attention. The home at $829,900 that gets reduced to $809,900, is still going to get ignored, regardless that the price was dropped by $20,000.
Reason #3 – Declining buyer quality
In the first days or week of the listing going live, the buyers who show up will be serious. These are the buyers who are qualified, organized, and ready to buy. Fast forward 11 weeks, and the buyer showings are fewer and farther between. Another few weeks, and the buyers are looking for “a house” rather than “the house”.
A few weeks beyond that, the buyers are simply looking for a deal. They’ll look at five houses at once and try lowball offers on them all, hoping that one will stick.
Reason #4 – No fear of loss
If you have ever tried to buy concert tickets for a popular show, you know the stress of trying to get into the website and secure your seats before someone else beats you to it. That is the fear of loss at its most intense. There is stress, anxiety, and laser focus.
When a buyer goes through your home on day one, and there are seven other showings that day, they’re going to experience this same fear of loss. And no, this doesn’t require gross underpricing to achieve it.
A home that presents well and is priced fairly to the market, in most market conditions, will result in higher-quantity and quality buyer traffic. For such a home, buyers won’t feel that they have the option to go shopping for another week. They will be keenly aware that they need to act before someone else does.
Reason #5 – Seller exhaustion
The seller who says they’re not in a rush has likely not experienced having their home ready for showings for many weeks in a row. Getting your home neat and tidy in those first few weeks is pretty manageable. After all, you’re kind of excited, and it almost resembles fun.
Fast forward five weeks. You’re finishing dinner and pretty tired after a long week.
*ping*
A showing request comes in for 9:30 a.m. on Saturday morning.
Guess what?! It’s time to clean your kitchen, tidy up the bedrooms, clean the bathrooms, cut the grass, straighten the linen closet, vacuum... argh.
It’s one thing to be on the market for three or four weeks. It’s an entirely different process to be on the market for 12 or 13 weeks. Or 19.
The Summary.
The result of all of the above is that you may find that you’re chasing the market. The reality is that if the only thing you’re competing on is price, it’s a race to the bottom as you continue to chip away chunks of money from your asking price.
The alternative is a well-planned, thoughtful, and professional strategy that puts your home in the best position possible to garner strong buyer attention and ultimately, stronger offers.
Looking to chat about your home or your real estate strategy?
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