7 Pricing Myths Busted if You Want to Sell a House
Updated: Jan 23, 2019
When homeowners are preparing to put their properties on the market, one aspect is usually foremost in their minds: money. Setting the asking price accurately can mean the difference between getting an offer quickly and having a house languish for months.
With that in mind, it is important that potential sellers block out a lot of the noise often surrounding the intricate art and science of pricing. There are plenty of myths that may cause sellers to lose sleep at night as they attempt to separate fact from fiction.
Here are some common statements that can officially be classified as myths:
1. ‘If we keep waiting, a better offer will come along!’
When sellers receive an offer from the first showing, they may be skeptical or hesitant to accept it, wondering if other prospective buyers would be inclined to pay more. Thoughts of potential bidding wars could cause sellers to want to wait and see who else falls for their place. “A bird in the hand is worth two in the bush.” There is no guarantee other would-be buyers are waiting around the corner. If the offer is a fair one, the seller should entertain it.
2. ‘Getting an offer right away, means the agent priced it too low!’
When sellers receive an offer early in the process, as excited as they might be, many cannot help but wonder, “Should we have asked for more money? Did our agent price it too low?” While it is natural to be skeptical (and even a little greedy), receiving an offer on the early end of the spectrum most likely means the home was priced accurately and attractively. Your REALTOR® did not pick a number out of the sky, but rather based it on extensive market research.
3. ‘We should price it so there’s room to negotiate!’
Most sellers would love to get top dollar for their home. But overpricing a home with the intention of being willing to accept a lower offer may just leave a seller empty handed in the long run. If the seller has to drop the price of a home multiple times, buyers may begin to wonder what is wrong with the place — other than the price, that is.
4. ‘That’s not what my Zestimate says it’s worth!’
Ever noticed how homeowners are eager to believe Zestimates or other automated valuation models when that price exceeds their expectations? Yet, when the opposite happens, they assume it is outdated or erroneous information. The point is, these numbers can be inaccurate, so trust your REALTOR® to ensure you are getting updated and accurate market data that is relevant to the home being sold.
5. ‘We can add all renovation costs to the asking price!’
Sellers may adore the improvements and renovations they have made and want to add in those costs to the asking price. However, as with any perspective, there is another side to it. Will the buyer be as adoring of these improvements? Not every change is going to land a huge return on investment. Curious about what a seller can expect on improvements? Refer to Remodeling Magazine‘s annual ‘Cost Versus Value’ report to get an idea of which upgrades yield the biggest bang for your buck. Bear in mind that the infinity pool you viewed as an asset may just seem like a huge liability to a buyer.
6. ‘My REALTOR® overpriced my house to make a larger commission.’
Agents are paid a percentage of the selling price of the home. However, even if they were to raise the asking price by $25,000, in most cases that would yield an additional $1,500 in commission, which would then be divvied up between the broker the agent is working for and the buyer’s agent, leaving your agent with less than $750 more in his or her pocket. It is hard to imagine an agent would risk a potential quick sale — and take on weeks or months of additional showings and marketing expenses — for a few hundred dollars.
7. ‘Reducing the price is a sign of weakness!’
While no homeowner is eager to drop the listed price, if time is passing and there has been little interest in the property, it could be time to consider lowering the asking price. Time is money. While a seller waits for someone to meet the set price, the seller is still paying the mortgage, taxes, utilities, insurance etc. Sometimes, lowering the price can put the home in front of a group of new buyers, which could generate a lot more interest and, ultimately, get the price back up closer to where it was in the first place.
These myths should not linger in a seller’s mind if the seller has chosen the right REALTOR®. The agents at Skylight Realty Group study the home’s market and have experience selling homes. We have helped many clients navigate the home selling process.