Everyone wants to get as much for their house as possible and most home sellers want to do that as quickly as possible. (Why drag it out over months and months if you don’t have to?) At the same time, home sellers also want to give themselves some “wiggle room”, room for negotiations – you never know what the inspector might find. I don’t think anyone will argue with the statement:
“There is a tendency for home sellers to want to start too high.”
The opposing team, the homebuyer, wants to get the best deal he can. He may love your house. He’s got a pretty good idea of value. He’s been looking for a while. He’s been through Open Houses. He’s found an agent to work with. He’s been pre-approved for a mortgage… He’s ready to buy.
The game has changed
Like a lot of businesses, the business of buying and selling real estate is undergoing a radical shift. The access to information brought on by the internet has shifted the power away from the real estate agent and his client – the home seller.
Buyers have the power now. Think about it. Think about how you buy. Let’s say you need a new laptop. In the old days (10 years ago), you trundle off to Best Buy and scope things out, maybe even talk to a salesperson!
What do you do now? What do you do in 2013? If you’re like most people, you start with the internet. You gather information, all you can online and then you go out shopping, or you buy it on Amazon.
Unfortunately, you can’t buy real estate on the internet. Rule #17
Long story short –> homebuyers are not going to pay too much for your house.
How the real estate game works in 2013.
Smart homebuyers, have moved themselves along the curve, down the sales funnel. They are working with a real estate agent. They are on a “drip campaign” – receiving automatic updates of all properties as they are listed on Realtor.ca (the MLS).
They’ve been shopping for a while. The houses already on the market that match their search criteria have been looked at, perhaps visited, and eliminated as unsuitable.
Informed homebuyers and the MLS
Good Realtors get their clients involved in the home buying process by giving them access to the MLS. We do this by building a file on our clients’ wants and needs and setting up automatic notifications when a new listing hits the MLS that matches the criteria we’ve inputted. One of the inputs is price. If our client is prepared to spend $330,000 we will put our search criteria “up to $340,000”. We know all about wiggle room too.
The best houses, priced right go fast
You can see from the above scenario why the best houses, priced right go fast. You have an informed buyer ready to go, waiting, just waiting for the right house to come onto the market. When it comes onto the market he is going to strike with absolute clarity and buy it up before some other buyer gets to it. Yours is the house he’s waiting for, but wait, you’ve overpriced it.
What happens if you price your house more than $10,000 above the market price?
Many home sellers, as discussed at the beginning of this post, price their house too high. Perhaps they give themselves too much wiggle room. Perhaps they just want to “try, and see what happens”.
What happens is –> no offers.
We are all working from the same information. Actually, buyer’s information is better. They’ve been in the market longer. When you were getting your house ready to sell, they were already shopping.
Eventually, after three weeks or three months (ugh!!) when the home sellers lower their price to the market price, the potential homebuyer sees price reduction and what do they think?
“What’s wrong with it?”
If they want to see it and if they like it, now they want to make a deal. It’s human nature. Your house has been on the market awhile. A lot of people have seen your house and not bought it. Maybe you’re desperate now. Maybe there really is something wrong with it.
“Have you had any offers?”
If you get this question, you know you’re in the hurt locker. You know you are overpriced.
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