The biggest mistake sellers make? Going with the realtor who tells them they can get more for their house than the other realtors they’ve talked to. And here’s why.
We base our suggested list price based on comparables in the same area. We look at things like the numbers of bedrooms and baths first. That gives us a range that we can adjust up or down depending on finishes, lot size, etc. If you price your house way above what’s fair, people won’t even look at it.
A friend of mine referred me to a seller last fall who wanted to know what I thought their property was worth, as they were building a new house and needed to put theirs on the market.I went over the comparables and suggested a range. I was surprised to see the listing pop up on MLS a few weeks later at around $ 50K more than I had suggested as an upper limit.
Not surprisingly, the listing languished over the winter and well into the spring. By then, it wasn’t only staled-dated but vacant. After a series of price drops, it finally sold, for exactly what I had predicted. “They now realize that you were right,” my friend quoted the sellers as saying. “They were told what they wanted to hear.”
So who wins in that scenario? No-one. The agent got a sale, yes, but they had to promote the property for eight months, well over the average 80 days on market in Ottawa. And that agent won’t get a referral from the client because despite all that work, the seller is disappointed. Because the property didn’t sell quickly, the seller had to carry costs for months than would have been unnecessary if the property had been priced properly, in other words, “priced to sell.”
“What if we price too low?” I often hear sellers say. “After all, we don’t want to give it away.”
Well, I know it sounds counter-intuitive, but you can never go wrong by pricing a property too low. If your realtor suggests a price and you think it’s too low, hold off on offers for a week. If it’s really too low, the market will rush towards a perceived bargain and you will get multiple offers, which will drive up the price to what the market decides is fair. (No one will knowingly pay more than fair value, nor would you, right? So forget about waiting for that “right” buyer to come along if you’re over-priced. That aren’t that many dupes on the market.)
And if you don’t get lots of activity, believe me, it wasn’t too low.
Pricing too high, on the other hand, means driving away prospective buyers to other, better-priced properties in your area. An over-priced house helps realtors sell other homes as they can show buyers how much more value they can get for less money.
So when you talk to realtors, don’t go with the realtor who promises you the sky. Go with the one that’s sensible and can justify the price they suggest based on comparables, not wishful thinking.