Sellers must be realistic when setting their home’s price
Sellers can be very unrealistic about price. There are several problems with this, some obvious, others not so obvious. For the most part, the reason for this is what is called the endowment effect. Behavioral economics studies find that humans tend to overvalue their possessions compared with the value the market will actually bear for those possessions. It’s important for home sellers to remember that it’s no different with cars than it is for real estate. An educated buyer is extremely unlikely to make any offer on a property when they can purchase a comparable property for a lower price. Of a group of comparable properties, you as a seller want to be priced slightly lower than the rest. When you price higher, or even at the same level as everyone else, a couple of things happen:
1. The few buyers that may be interested in your home, have done their homework and put their time in to know the market, see your home and move on, unlikely to revisit as the excitement of your property being a new listing has subdued. Most of the potential buyers now viewing your home are not in the final stage of buying and are unfocused.
2. Your home doesn’t get exposure to those buyers that know the values and are searching for the right deal on the internet under a certain price point.
3. One of the comparable homes to yours decides to lower their price, and sells. As a result, the value of your home and it’s comparables is brought down even lower.
4. When you finally come to a point where you decide to lower your home to the right price, you’ve lost momentum, and the extensive time on the market results in your loss of negotiating power. This often results in a lower final selling price than what you would have received had you only brought the home to market at the correct price originally.
It is important to remember that there are 2 ways to price your home. To sell it, or to sell somebody else’s. Are you with me? You can’t change the value of your home simply because you want more money for it. The value of your home generally remains the same regardless of your agent. You as a seller only have control of 3 things; price, terms and condition of property .