As most of my readers know by now, I’m a numbers gal. I am consumed with market statistics. I have been for 15 years. I know for a fact that to represent my Huntsville home-buyers and sellers to the best of my ability, I must know my market.
I know that overpricing will ultimately lead a seller to sell their home for LESS. It really isn’t a secret, but it is probably the most “head knocking” conversation that I (and Realtors that DO know the market) have with potential sellers.
When I sit down with a potential seller to interview each other, I know 2 things …how I can market the home and what the market will bear in asking price. I have NO idea what it will truly sell for. The only person that does know is our potential buyers. They own the market in the majority of price ranges right now.
Overpricing – Costs You Time and Money
As the market sits now, maybe this isn’t the best time to sell …if you have a choice, now is a good time to sit still, unless you are moving up in price.
If moving up, you may take a loss on your sale, you should potentially gain more on your purchase. I do consider that a win-win for the long haul.
So, here are the dirty, ugly facts of overpricing your home. To drive my point home, I pulled all homes sold in Madison Country for 12 months, (6/30/10 to 6/30/11). I also used the most active price ranges, from $100,000 to $400,000. What the data shows was quite shocking, even for me, a seasoned professional.
The numbers are:
ORIGINAL list price to final sale price: 91.64%. This figure shows the original list price to what the home eventually sold for. The final listing price to sale price: 97.52%.
Buyers Set Market Value in Buyer’s Market
What these numbers show is this…the longer a home sits on the market, the more price reductions are needed as illustrated in the graphic above. Remember, only a buyer determines that at the moment.
A home is only worth what a buyer is willing to pay for it, period. It doesn’t matter what a home appraised for, any recent improvements, or if you paid “X” and must have “Y” nor does it matter that the sellers have refinanced. What matters is that a buyer feels it is worth “X” $$$$. No discussion here …this is the truth. It’s ugly out there for sellers. Period. My buyers are thrilled. My sellers are not.
If you are considering selling your home, here are the MOST important things you must consider before listing.
- What is the absorption rate in your price range/area?
- What do recent comparable’s say your home is worth? In this market we MUST consider active listings as well as expired and solds.