Did you know many real estate agents will let their clients dictate sales price based on what they think their home is worth? Sellers who are given free reign to set their home’s initial list price are left disappointed months down the road when their listing is stale and still sitting on the market.
Simply put, homes need to be priced to sell, not to list. There is a big difference! “Testing the market” with an overpriced listing will ultimately yield longer days on market, more seller frustration, and an overall lower sales price in the end. The longer a listing sits, the less attractive it becomes to buyers.
Taking the emotion out …
Most sellers say they want to sell for a certain price, but what they want vs what the market will bear can be two different things. I’ll have a very real moment with you … about 90% of the time when we meet with sellers, they either want to test the market with an inflated price OR they truly believe their home is worth more than recent comps.
Here at The Wistrick Team, we ALWAYS push to set record prices for our selling clients (and we often do); however, doing so requires strategy and realism. Buyers are savvy these days with access to loads of sales data online. More importantly, we have the appraiser to contend with.
Appraisers are very black-and-white, almost robotic. So even if we are lucky enough to find a buyer who’s willing to pay over market value for a home, the appraiser’s job is to prove or disprove the agreed-upon sales price matches the home’s true value. (Note that the appraisal is the LAST step before closing—so ¾ of the way through the process.) The aftermath of an appraised value coming in less than the sales price sends shockwaves throughout the entire transaction. The seller is furious; the buyer is panicking; the agents have to start negotiating again, and the lender is on the verge of starting over at square one. So pricing right from the start is key!
But we upgraded our home … shouldn’t it be worth a lot more?
This is a conversation all its own. The short answer: sometimes yes and sometimes no.
If upgrades were necessary to bring your home up to speed with others in the area, then it will be viewed as comparable. (NO)
If you finished a basement and others didn’t, then you would gain more finished square footage, thus more value. (YES)
Loading up the house with top-of-the-line flooring, cabinets and fixtures may look really nice, but you may not always get dollar for dollar. (NO)
Additions, sunrooms and extra bedrooms/bathrooms, however, will. (YES)
If your home is within a neighborhood of similar houses, there’s always a limit to the home’s appraised value. (NO)
Every situation brings its own nuances, which is why I recommend shooting me a quick email to review your planned home renovations and upgrades to understand the value it will bring when the time comes to sell.
In summary, when a home is getting ready to hit the market, it’s vital to get the price right. With 16 years of experience listing homes, we know what data to review and where to find it in order to list a home at a price that is competitive, ambitious, and realistic. This is how you get the most out of your real estate investment.