Price Your Home Right!

The single most important factor in selling your home in a buyer's market is to price it right. For this Step, I went to the real estate professionals for their input on pricing homes. What became immediately clear is that the topic of pricing a home is a painful one to sellers in a buyer's market, especially when housing prices are falling.

It was August of 2006 that the median price of a single-family home first declined from the previous year. According to the National Association of Realtors, it was the first significant decline in 13 years. Before that, home owners enjoyed five years of a housing boom, watching the value of their homes rise robustly. 1

Although the decline in home prices is no longer news, it's still very tough for many sellers to face the reality. But, if you want to sell your home, it must be priced competitively for the market.

Because my area of expertise is in design and bringing out the full potential in homes, I let the real estate professionals explain why pricing is so important. The remaining information in this Step is devoted to what the agents told me in our interviews.

Overpricing the Home Biggest Mistake Sellers Make

When asked what the single biggest mistake homeowners make when trying to sell their home was, virtually every real estate professional I interviewed said overpricing the home. In hard-hit marketplaces, buyers only look at foreclosures and bank owned deals.

Amanda Sarnes is a Realtor in Apopka, an area in Central Florida that is seeing many foreclosed homes. When asked about mistakes people make, she said: "Pricing it way too high! I will not spend time or money marketing a seller's house that wants to list too high. In this instance, I require that they get a current appraisal to justify the value they pick if it is far off from my comparative market analysis. Every time I've done this, the seller realizes I'm right and I then get to list it at a price that sells."

Andy Ryan, a Sales Representative for Century 21, in Toronto, Canada, was blunt when asked the question: "The number one factor in determining whether a home sells or not is its price. It doesn't matter what condition your home is in or where it is located, it will sell if it is priced right for what it is, where it is, in the current market."

According to Bill Golden, a 22 year veteran Realtor in Atlanta, Georgia, "The number one mistake people make is overpricing. Many times homeowners try to justify that by saying they're not in a hurry. Unfortunately, that logic doesn't work. If the home sits on the market a long time, you generally end up getting less than if you had priced it right from the start."

"The biggest mistakes that people make when putting their home on the market is overpricing it hoping to leave room for negotiations and expecting numerous people to come through the house and an offer right away. There is not a bigger mistake a seller can make when marketing their home," declared Sheri Moritz, Broker/Owner in Garner, North Carolina.

When I asked Debra Duneier, a Feng Shui practitioner and a Senior Associate Manhattan Real Estate Broker for Corcoran in Manhattan, what are some of the biggest mistakes people make when putting their homes on the market, she said: "Over pricing your property is the biggest mistake a seller can make. When a property goes on the market your largest pool of buyers will be activated. That is when you want the price to be right. If it isn't they will move on and your property will become old stale inventory. By the time you reduce the price you have fewer interested buyers."

The situation in some regions, like Sheffield, Ohio, is pretty tough, According to Cheryl Repko, a Realtor with RE/MAX: "Last year my sales ranged from $220,000 down to $10,000 with an average sale of about $112,000. I work mainly in the city of Lorain Ohio, where I grew up. Lorain was a bustling industrial city in the past. My dad worked for National Tube/U.S. Steel and many of my friends' dads worked at George Steinbrenner's American Shipbuilding, building and maintaining the huge iron ore carriers that supplied the steel industry. Ford built a car manufacturing plant in Lorain in the late 1950s, too. While Lorain never had the high home price spikes and valleys (or bubble) that we read about on the coasts, home values did show a consistently small increase over the years until the last few years. Now American Shipbuilding and Ford are gone and the steel plant is working with a fraction of its former workforce. While Lorain seeks to find its new identity, workers are relocating and the housing market is suffering. The area has seven to ten months of inventory on the market and Lorain's most active price range for sales is now under $40,000 and many of those are bank owned. More home listings expired in the last six months than sold. Investors who will rehab the homes and use them as rentals are buying homes for very low prices (well under $10,000 at times) and don't really care about the condition of a sold house because they'll tear everything out anyway. Hardworking people who have lived in and maintained their homes are finding it quite difficult to find buyers for their homes. Some homes are selling, however, and the task for these owners and their agents is to make every attempt to attract a buyer. Today's buyers are empowered by the media. They know it is a buyer's market and they naturally want the best deal possible. A seller and agent can come up with quite a few things to create the perception of a good deal!

The first and most important factor in selling a home in my market is setting a reasonable list price based on current market data. In a market where more listings expired than sold in the last 6 months and the current inventory is a 7-10 month supply, buyers have plenty of choices in their price ranges and recognize overpriced listings. Sellers often are remembering their last appraisal or what their neighbors' houses sold for several years ago and have difficulty accepting the current estimated market value of their homes even when supplied with current comparable sales data. Sometimes they convince an agent to overprice the home. If, however, the list price is not reflective of market value then no amount of staging or marketing will sell it."

Whatever you do to get your home ready to sell, please listen to the agents and price your home based on their suggestion.

Excerpt from Sell Your Home Fast in a Buyer's Market