Be a Steak in a Land of Burgers
One of the most important parts of selling a house is not removing family photos, painting the walls or having a million-dollar ad budget. Don’t get me wrong, all those things are great too of course. However, the number one thing to do to sell your home is to price it properly for the market. It is the one thing that will either make or break the deal in 100% of cases.
WHO DO YOU KNOW THAT WILL OVERPAY?
Buyers know when a home is overpriced (and if they don’t, never fear, their agent will tell them!). Today’s buyers are more informed than ever with a seemingly endless stream of data available 24/7. Every house is in competition with all the others and overpricing will get you cut from the list before they even see it. For a non “real-estatey” example, let’s say we go out to eat for dinner. There are two meal options—a steak for $19.99 or a burger for $24.99. Not sure about you, but I’ll take the steak. It’s a simplified analogy, but the bottom line is, you want to be the competitively priced steak rather than the overpriced burger. If you’re the burger, all you’re doing is helping to sell the steak.
“…BUT WE WANT TO LEAVE ROOM FOR NEGOTIATION!”
On the surface, this sounds like legit logic, right? Well…not exactly. Here’s why: You can’t negotiate a non-existent offer! Actually, there is no rule saying that you have to negotiate at all. Let’s look at a very “real-estatey” example: you’re ready to list your house and both you and your REALTOR® agree that the fair market value is $100K. Instead of pricing at fair market value, you want to “leave room for negotiation.” So, you list it for sale at $129,900. All you’ve done is cost yourself valuable time and money and probably a fast sale. Why? Your true target market (aka the $100K buyer) will never even look at your house because it is priced out of their budget. Even if the buyer is approved for $115K (which is plenty to purchase the house at your true price), they still may never look at the home because most will not extend their search that high above their purchasing power. The buyers you are left with are in the $125K+ price range. Along with a higher price point comes higher expectations and the competing properties are much nicer than yours. Instead of being the best house in the $100K range, now you are the worst house in the $125K range. Yup, you’re the burger in a land of steaks. Which would you buy?
DESPERATE TIMES MAKE FOR DESPERATE…BURGERS
The most showings will occur when the property is first listed. It’s new, it’s fresh and all the buyers want to see it. Once these buyers view it and end up buying something else (yeah, they bought the steak), you have to wait for new buyers to enter the market (and will likely have to reduce the price to become competitive.) When your house is for sale, time is your enemy. Generally speaking, your profit is directly correlated to the days on market. The longer it sits, the less you’re likely to make. It can also create a kind of frenzied desperation when there are no offers and you may find yourself grasping at a low-ball offer because you are so thrilled that someone is finally interested. It’s better to just be a steak from the beginning rather than become a desperate-to-sell burger.
BE THE STEAK YOU WANT TO BE
Of course, price is not the only reason why a home does or does not sell—location and condition also come into play. All are important, but price is the only one that can certainly be changed and can overcome both negative location and less than ideal condition. Price is king and condition is queen and overpricing will cost you more in time, stress and money than it will ever make you. Don’t fall into the pricing trap—be a steak, not a mistake.
Lisa E. Priest is getting hungry and is a Broker/REALTOR® with Picket Fence Realty, Inc. You can reach her via phone or text at 903-948-3343 or read more at BuyPalestine.com.