Selling your house can be a long and emotional process. The hardest part for some is deciding how much their home is worth. While the sentimental value of one’s home may be high, it’s best to remember that both sellers and real estate agents have limited control over the market price of a property. Getting your money’s worth, so to speak, for your home is important. But it’s equally important to not price your home too high.
Here’s why. It will take a lot longer to sell. If your house is priced correctly, it should generate a steady amount of interest from home buyers. It may not sell right away, but you should nonetheless start receiving offers. Of course, this all depends on your local market, but even overpriced homes in highly active markets take a while to sell.
It will end up selling for less. When overpriced homes do eventually sell, it’s because the owner has resorted to drastically dropping the price. The longer a home sits on the market, the less interest it’ll generate from buyers over time. If too much time passes, the seller will usually end up selling their house for less than they would’ve had they priced it right in the first place.
You’ll attract the wrong kind of real estate agents. If you find an agent who’s willing to list your property at a price significantly above the other recommendations you’ve received, chances are that agent is looking to just get your listing. Unfortunately, there are agents out there who will agree to list your house for a price that’s too high because it’ll benefit them in the long run, not you. They will agree to overprice your house, and it will sit on the market for too long. Eventually, you’ll be forced to dramatically cut your price.
This is a technique some agents use to attract as many sellers as possible. Even if your house doesn’t sell, the agent will still get free advertising by having their sign in your yard for six months!
You’ll miss out on a bigger market of buyers. People tend to search within certain price ranges. For example, if you’re tempted to list your house at $315,000, it’ll be to your benefit to round down to $300,000, if only so you don’t miss out on a bigger market of buyers. Keep in mind, if your house is listed at a great price already, you’ll receive far more offers. You may also be able to negotiate a better deal overall.
Buyers may not qualify for a mortgage. Homes are appraised prior to a buyer receiving a mortgage. Banks can turn down a mortgage if the listed price of the home is significantly greater than the appraised value of the home. This is a very important, but easily overlooked consideration when pricing your home.
When it comes down to it, you should view pricing your home as a science. There is a strict range for a home’s value, and that range is determined by a home’s appraised value and its comparable listings.