One of the most detrimental mistakes that sellers make when putting their home on the market is overpricing the property.
Often, sellers set a higher price for their property than what they want to get out in the hope that, if a buyer offers a lower price, they will still be able to negotiate close to the original price that they wanted.
However, if a property is overpriced, many buyers won’t even take the time to view it and would rather look at other properties that are priced at what they deem to be reasonable market value. All that over-estimated prices do is make properties that are priced correctly look like bargain buys.
For a large majority of sellers, setting a price on their home is based on more than just the market value. Home owners who have stayed in their house for some time may have put a lot of work and care into making it a home. This is often why sellers see their home as having more value than other properties in the area. However, buyers won’t have the same perception of the property.
While buyers take many factors into consideration when looking for a property, such as its location or features, a property that is priced correctly is more likely to appeal to a wider range of buyers and be sold within a shorter time. When a buyer is comparing properties that are in a similar area and offer similar features, price becomes the number one factor that will influence their decision-making process.
With financial institutions slightly relaxing their lending criteria and more buyers entering the market, sellers that over-price their homes are missing the opportunity to find a buyer quickly. Houses that sit on the market for long periods generally lose their appeal and these sellers are eventually forced to lower their prices anyway. In many cases, sellers are finally selling their homes for a lot less than what they would have received if the home was priced correctly from the beginning.
Statistically, if a property is priced correctly it will be sold within the first four weeks of being on the market and, generally, it will sell at the asking price. Recent research has found that homes that remained on the market for five to 12 weeks sold for three percent less than the asking price, 13 to 24 weeks for six percent less and houses that were on the market for 24 weeks or more sold for more than 10 percent less.
If you are using an estate agent to sell your home, ask the agent to complete a comparative market analysis (CMA), which will give an accurate indication of what other homes in the area are selling for. Factors that should be included in a CMA include the average price per square metre in the area, recent sale prices of similar homes and comparative prices of other properties that are still on the market. This information will help establish a reasonable price bracket for the property.
Once an estate agent has the correct price bracket for the home, they will then determine what features or unique qualities could set the property apart from others in the area to give a more accurate gauge of the home’s value.
Unfortunately for many sellers, the market conditions will have the last say in the estimated value of homes. Property prices have seen a drop from the boom era and sellers need to adjust their thinking to relate to the current market. Buyers are spoilt for choice when it comes to well-priced investment opportunities, so sellers need to ensure that their properties are priced accordingly – or run the risk of watching the market from the sidelines.