As I mentioned in last week's blog (here) when we sold our own house before we were realtors there were some common seller's mistakes that we avoided. By avoiding them we were able to have our house listed for just one day and get a full price contract in that one day. This week I want to address another mistake we were able to avoid. That is a super common mistake of pricing the property wrong when you go to sell.
There are a few thoughts... of course you want to get as much as you can from your biggest investment, so the thought is to price it high and a buyer can offer you under the listed price because they want to buy low. Yes, buyers will offer lower than list price... sometimes. WITH A WELL PRICED HOUSE THAT DOESN'T HAPPEN. On average we are seeing houses sell for 97% less than list price. BUT that includes houses that were priced right and those that were overpriced.
Another common mistake in thought process is you want to price it by saying you bought the house for $X, invested $Y in upgrades, and therefore you want to take $X + $Y and sell the house for $Z. It doesn't work that way either. Most of the upgrades you make will need to be done because you wanted them and not because you will get dollar for dollar on them when you sell. Take a look at this infographic put out by Florida Realtors of what to expect from remodeling projects.
Pricing the property wrong is a huge mistake! This is the difference between getting people to see the property and not. And the fewer people that see the property the less likely you are to get a contract, much less multiple contracts. There are two things that happen when a property goes on the market. First there is always more interest the first week it is on the market. That is when you get the most eyeballs. Second, the longer a property stays on the market, the longer buyers start to question what is wrong with it even if the house is perfectly fine. Ultimately what ends up happening is the sell price drops the longer it has been on the market. That could be because of lack of interest or the fact that the property was priced wrong to begin with. These graphs demonstrate what interest looks like and what happens to the sell price as a house has been on the market.
I always say... selling a house is a game of getting eyeballs on the property. The more eyeballs you can get the more likely a house is to sell. Part of that process is to price it right so that people want to see the house. An overpriced house will not get much interest. A house priced right will get more interest. A house priced under market will get a lot of interest. Here is a graphic to show level of interest in houses based on fair market value.
So you may ask how do you know what the right value is for a house? It all starts with what similar houses in the same area have sold for in the last three to six months. It also depends on the demand. As I am writing this, there is a shortage of housing inventory nationwide and this is driving up the demand and therefore driving up the prices of houses. That doesn't create an excuse to grossly overprice a house though! The easiest way to find similar houses is to work with a local realtor. They can provide you with a comparative market analysis. Zillow's zestimate is another tool, but this isn't always accurate because it is built using algorithms. We find that the zestimate is usually behind any market trends.
We are happy to provide you with an estimated home value even if you aren't thinking of selling any time soon. Do you want to know what your home would be worth in today's market? Just ask us.
Mistakes to Avoid When Selling Your House - Part 1