Google has a word for an ambitious project – they call it a “moon-shot”. Owners who are about to put their home on the market will often and unknowingly copy this approach when deciding an asking price.
“Let’s test the market,” they declare – code for saying they want to ask too much and see if anyone is crazy enough to bite.
Unfortunately, the aim is not to find crazy people but to sell your home – and this is not the way to do it.
Today’s buyers are conducting more research than ever, using free data from real estate sites, the resources of their lender and automated valuation models like Zestimates.
They’ll also have their own agent to help them find their dream property and not make an expensive mistake. So, few will walk through your home without a sense of its value.
As an experienced neighborhood real estate agent, I get asked more questions relating to price guidance and buyer interest than about a property’s features and benefits. That’s because buyers are trying to capture the mood of the market to validate or recalibrate their assessment.
If you price your property beyond the recent price curve, you’ll likely miss your target buyer and the house will sit on the market forlorn and unwanted for months.
So if you’re preparing for a sale, then careful consideration needs to be given to pitching a fair price to meet the market expectation. Once we have buyers in, negotiation skills come into play. But here are some points to consider when pricing your property that I would be delighted to go into more detail with you.
- Buyers are increasingly well-informed and will recognise – and reject – any overpriced property.
- Covid has changed the market. We’ve got 30 minutes for an inspection. Your price has got to be “on the money”, or the buyer and their agent will walk.
- Testing the market works well when marketing soap, not real estate. With soap, you can change the product, pricing and packaging before a full launch. With your home, you have one chance – and you don’t want to mess it up.
- Buyers are suspicious of homes that languish on the market for a long time. They think there’s something wrong or the owner is asking too much. So, they reject it sight unseen. That scenario is a massive headache for any seller.
- You can expect your agent to invest time and money in preparing your home and then marketing it. They’re invested in their belief your home will be sold and commission will be earned – so they have a stake in this. Listen to their advice.
- Quality selling agents know buyers don’t fall for a “test the market” ploy. We focus our energy on what we know will sell. Quality selling agents will reject your listing as it’s bad for their professional reputation. Those agents willing to take you on will believe they’ll get you to see sense.
- And even if you do find a buyer . . . lenders will appraise the value of your home before issuing a mortgage. If they believe their customer – your buyer – is about to over-pay, they’ll refuse the loan. And you’ll be back to square one.