The #1 Thing Sellers Need To Know About Their Asking Price

The #1 Thing Sellers Need To Know About Their Asking Price

When you list your house for sale, the usual aim is to sell it swiftly and at the highest possible price. However, many sellers currently have unrealistic expectations, unaware that the market dynamics have changed as inventory has increased. This has led to a notable rise in price reductions, although this trend isn't necessarily inevitable. Here's the explanation.

Data from Realtor.com indicates that in February, the frequency of price reductions reached its highest level for the month since 2019, as demonstrated in the graph below:

Considering 2019 as the last "normal" year for the housing market, the recent increase in price cuts is quite significant. This indicates a shift back to more typical market conditions.

We're no longer in the highly competitive seller's market of the past few years. It's unlikely that you'll fetch the same selling prices seen at the peak of the pandemic, which means it's crucial to adjust your expectations accordingly.

The truth is, overpricing your home initially and then lowering the price later can lead to receiving lower offers than if it had been priced correctly from the outset. So, how can you avoid this pitfall? The key is relying on your real estate agent.

How an Agent Helps Determine the Right Price

A skilled agent doesn't just estimate a price randomly. They utilize real data and current market trends to ensure your house is priced accurately, reflecting the true value of your home today. This means setting a realistic price that will attract genuine interest.

Your agent might even suggest pricing your home slightly below market value to capture more attention and provoke competitive offers. They will determine the right price by:

• Analyzing Recent Sales: Focusing on what similar homes in your area have actually sold for—not just their listing prices.

• Studying Local Market Trends: Understanding that the value of your home depends on what buyers in your area are currently prepared to pay.

• Strategizing the Pricing: Ensuring your home's price will draw interest and prompt urgency among potential buyers.

Why Overpricing Is Counterproductive

Despite advice to the contrary, some sellers choose to list their homes at a high price initially, hoping to either secure their full asking price or leave room for negotiation. However, this approach often leads to detrimental outcomes:

• Lack of Interest: Today’s buyers, who are more budget-conscious, might completely overlook an overpriced property rather than attempting to negotiate.

• Prolonged Market Presence: A home that remains unsold for an extended period may lead to perceptions of underlying issues, making it harder to sell later.

• Reduced Final Sale Price: Homes that undergo price reductions typically sell for less than they might have if priced correctly from the start.

This pattern is clearly demonstrated in the graph below, which uses data from the National Association of Realtors (NAR) to show that the longer a house remains on the market, the less it ultimately sells for:

This graph illustrates that homes selling within the first four weeks typically achieve their full asking price. This outcome is common for homes priced at or slightly below the current market value. Properly priced homes attract buyer interest quickly, leading to potential bidding wars that could drive the price even above the asking amount.

Conversely, if a home is not priced correctly from the start, it tends to linger on the market. According to the graph, after the initial four weeks, interest in overpriced homes wanes, and the likely selling price begins to decline. This situation often forces sellers to either accept lower offers or initiate a price drop to reignite buyer interest.

Bottom Line

Overpricing your home can lead to it sitting unsold, necessitating a price reduction to attract potential buyers. To avoid this scenario, it's crucial to get the pricing right from the beginning. Let’s connect to ensure your home is priced strategically to sell swiftly and at the best possible price.

Ready to see your home move quickly off the market? Let’s discuss the optimal pricing strategy for your property.