I sat at the kitchen table with my client. We had been in contact over the last several months as he fixed up the home that renters hadn't cared to keep up. They had, indeed let the dogs use the floors instead of going outside, and smoked like chimneys in the home. He restored it better than new.
It was truly a labor of love for him, rebuilding window boxes, painting, re-doing the kitchen, adding brand new carpet throughout. The results were spectacular. Any buyer would be proud to purchase it.
We poured over the recent sold data in the area and I suggested a price range. "But, I can't," he said with a sigh. "I
owe $Xxx,000. I need to price it about $25,000 higher than you are suggesting. Let's do that and see what happens."The Moment of Truth. Many agents have been here before. As have many sellers.
For whatever reason, it is time to sell a home. Maybe you are moving up, down-sizing, relocating. Maybe you have grown weary of the late night calls when the toilet overflows, and you don't see the upside to a property management company. Whatever the case, one must determine a price.
So, what's wrong with "seeing what happens"?
A few things:
- In many markets, the buyer has a lot of inventory to choose from. Buyers will start their search in with a certain number of beds and baths, and a price range. If your home is over-priced for the area, your home will help sell other homes. Imagine going to see a $250,000 home with 3 beds and 2.5 baths, and 2200 square feet. It's clean and has a lot of upgrades, including new paint and carpet. Just down the street is another home listed at $255,000. Except this one has 4 beds, 3 baths and 2900 square feet, plus an unfinished basement. It needs paint, but the appliances are in good shape.... Which do you think might appeal to you?
- Even if you don't "have to" sell your home, you are competing with others who do. Imagine the first home in the scenario above. Now imagine that on the next block there is a home with the same floor plan, square footage and beds and baths. Except this couple is getting a divorce and they want to get as far away from the home (and each other) as they can. They've listed theirs at $205,000, even though the comps in the area are closer to $225,000. Do you think the buyers will go for the $205,000 or that $250,000?
- Your home will sit on the market. For awhile. When homes sit on the market for many months and other homes around it are selling a few things happen. First, it's a lot of work to keep your home listed and the payments that you will continue to make start to add up. Second, agents and buyers start to see it as stale, and may even start to assume something is wrong with the home. Especially when the buyer and agent see the continuing price drops over the months with no action.
Beware the Perils of Overpricing. (LISA BEAR can help you explore the options.)
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