The Worst Home-Selling Mistake
This 6-figure slip-up cost one home seller plenty
Nobody sets out to make the worst home-selling mistake, yet it happens. Don't make this common home-selling error when you begin planning how much your home is worth.
We Want More Money for Our House
When the average seller sits down to interview real estate agents, it's easy to get caught up in the excitement over choosing a sales price. More money means more financial opportunities for the homeowner. Perhaps it means the seller can afford to buy a more expensive home, help pay for their child's college education, or take that greatly overdue vacation.
Uninformed sellers often choose the listing agent who suggests the highest list price, which is the absolute worst mistake a seller can make.
Is your agent correct when they suggest a price out of line with the expectations of other agents? That's the $69 million-dollar question. They could be absolutely correct, while all the other agents are wrong. Or they could be wrong.
Establishing the Value of Your Home
The truth is it doesn't really matter how much money you think your home is worth. Nor does it matter what your agent thinks or 10 other agents just like them. The person whose opinion matters is the buyer making an offer.
Pricing homes is part art and part science. It involves comparing similar properties, making adjustments for the differences among them, tracking market movements, and taking stock of present inventory—all in an attempt to come up with a range of value, an educated opinion.
This method is the same way an appraiser evaluates a home. And no two appraisals are ever the same. However, they are generally close to each other. In other words, there is no hard and fast price tag to slap on your home. It's only an educated guess, and the market will dictate the price.
Is Your Home Sales Price Too Low?
Homes sell at a price a buyer is willing to pay, and a seller is willing to accept. If a home is priced too low—priced under the competition—the seller should receive multiple offers to drive up the price to market value. So there is little danger in pricing a home too low. The danger lies in pricing it too high and selecting your agent solely on the opinion of value.
How It Starts to Go Wrong When Overpriced
The seller of one Spanish-style home didn't even interview their real estate agents. They plucked the first one off the internet because "He looked like such a nice guy." He priced the home at $1.3 million. This agent never heard the local agents chuckling behind his back because he worked in a different city. After 90 days, the listing expired.
Continues to Go Wrong, Still Overpriced
The next agent, also from another town, listed the home at $1.1 million. Months passed. Eventually, the price dropped to just under $900,000. Still no takers. A few lookie-loos, but no serious buyers.
More Than a Year Later at the Right Price
By the time the last agent was hired to list this home, the seller was exhausted. It was now 12 months later. Together, the seller and their agent priced the home at $695,000. It immediately sold for all cash. The sad part is the comparable sales in the neighborhood might have justified an earlier price of $835,000, but the home had been on the market for too long at the wrong price, and now the market had softened.
Agents Specialize in Expired Listings
One agent's real estate practice consists of calling sellers of expired listings and relisting them at market value. They sit in a small room with a phone, desk, and chair, dialing number after number. Last year this agent sold more than 34 homes valued at more than $13.6 million and had 18 active listings. The agent makes a pretty good living repackaging overpriced homes.
Protect Yourself When Pricing and Picking an Agent
How much money do expired listings cost the sellers? The financial loss often exceeds the extra mortgage payments paid and goes beyond the uncompensated hassle factor of trying to keep a home spotless during showings. It affects the value a buyer ultimately chooses to pay for a listing that is stale for a home sitting overpriced for too long. Don't let it happen to you.