Marsha, I’m ready to put my home on the market. I had my realtor do a market analysis of the recent comparable sales in my neighborhood. She put the value of my home between $750,000 and $800,000, and she wants to list it for $725,000. I want to put it on the market for $850,000 and see what happens. Don’t I want to go for the highest price possible?
Good Question! It may seem counter-intuitive but I agree with your realtor. Neither the owner nor the realtor set the price, the market sets the price. Buyers will perceive your house to be a certain value, and that’s what they’ll pay. For example, you may recently have put $50,000 worth of improvements into your home, so you want to price your home accordingly and set a higher price. However, if buyers don’t perceive the value in the improvements, you won’t get your price no matter how hard your realtor markets the home.
Think of your home as a commodity such as gold. Gold is bought and sold every day for the market’s perceived value. What if I purchased an ounce of gold two years ago for $2,000 and I now want my gold broker to sell my ounce for $2,500? I cleaned my gold and polished it to perfection. It’s gorgeous. My broker says that’s great but right now gold is selling for $1,200 an ounce. I demand he produce a beautiful glossy brochure with an expensive photo of my gleaming gold. He must host a gold broker caravan and win them over with a buffet lunch. Well, as you’ve probably guessed, no matter what the broker does to market my gold, the market will not pay a dime more than its perceived value. The same is true with your home.
If you put your home on the market for $725,000, but the true value is $800,000, buyers will see a bargain and flock to your open houses. You will probably receive multiple offers and sell the home quickly. Hooray! If you overprice the home at $850,000, buyers will skip your place on Sunday. You’ll have to reduce the price, the listing gets stale, and buyers have moved on. I’ve seen overpriced homes sell for less than they would have, had the home been well-priced at the start.
Listen to the market; listen to your real estate expert!