The Wistrick Team - The Price is Right ... or Wrong!
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Expert Tips

The Price is Right ... or Wrong!

August 11, 2020

You’ve probably heard by now that we’re in a massive “seller’s market.” In the world of real estate, this means there are more buyers looking to buy than sellers wanting to sell.


But even in a seller’s market, it’s still possible for homes to sit longer than they should or sell for less than their market potential. In this month’s blog, I want to explain how dollars are in the details of pricing a home right … or pricing it wrong.


Did you know there’s a significant difference between pricing a home at $399,900 versus $400,000? Many sellers and their realtors assume that pricing a home for $399,900 feels more appealing to a buyer. This is big mistake, and here’s why. When buyers are searching for homes, they set up their searches to pull ranges (ex.: $350,000 – $400,000 or $400,000 – $450,000). So guess what happens when a listing is priced at $399,900? Yep, you guessed it. The home listed at $399,900 won’t pop up in one half of potential buyers’ search results. All thanks to a $100 difference in list price. Agents and sellers who do this think they’re being savvy with an old school sales tactic, but they’re actually cutting out 50% of their showings and offer potential. Fewer showings mean fewer offers.


Now let’s talk about the impact of overpricing a home. Overpricing happens in one of two ways: 1) listing at a price well above recent comps or 2) listing at a price unsupported by the condition of the home. Experienced realtors understand how to price homes strategically. Here at the Wistrick team, we do tend to stretch the market when it comes to list price, but we make sure we’re not listing so high that it burns our clients with long days on market. An overpriced home will ultimately sell for at least 5% less than market value when it does finally sell! That’s because after a series of price reductions, a listing becomes stale. Stale listings invite lowball offers.


Here’s a common question we hear from sellers.


Could an overpriced home run into a big stroke of luck with a cash buyer? Of course anything is possible, but in reality the seller would have to come across a cash buyer who also lacks professional representation and would otherwise steer them clear of a bad investment.


Could an overpriced home run into a big stroke of luck with a financed buyer? Nope. Because the home appraiser is the Great Equalizer in these cases, and home loan funding is only approved when the home appraises for the loan amount.


To sum it all up, pricing a home correctly can benefit sellers by many thousands of dollars more in the sales price (with fewer days on market). Missing the pricing mark statistically costs sellers a significant amount of money. Discount brokers don’t care how much you stand to lose, and inexperienced agents simply don’t know any better. Without experience on their side, sellers don’t know what they don’t know … or how much money they stand to lose.

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