6 Signs That Your Home Is Priced Too High
6 Signs That Your Home Is Priced Too High
The price of a home that is up for sale is one of the critical aspects of getting a home sold. Price a home too high and the right buyers will not even give a home a second look. Instead the home will sit on the market without much interest and the longer it sits the more of a negative association will come with that home. Not that there may be anything wrong with the home but the longer it sits on the market then homebuyers automatically assume that something is wrong. As a result it pays to make sure a home is priced right from the start and/or the homeowner is ready to adjust the price if the signs show the price to be too high. This article explores some of the signs that may show that a home is priced too high.
Home Price Based On What You Paid And Upgrades Made
Just because you paid a certain amount for a home in the past does not mean it is currently worth that much. Homes need continual upkeep and upgrading in order to retain their value. As a homeowner lives in a home things wear out over time. Furnaces lose efficiency, garage doors and their openers breakdown, carpets wear down, paint gets old. If no repairs or upgrades were made or no other updates of the home were done in any way since buying it the value may not be the same as the day it was purchased. Certainly if the real estate market was on an uptrend from when the home was originally bought and then today it is put on the market to sell there could be some increase in value but not if the condition has not been maintained or improved throughout the time of ownership. If the real estate market is down from the time purchased the value may have even decreased due to lack of updates.
Just because you added a $30,000 dollar kitchen upgrade, or a $10,000 dollar pool in the back yard does not mean the house has increased in equivalent dollars. So the $300,000 dollar house with the $30,000 dollar kitchen upgrade does not mean the house is now worth $330,000. In fact if that house is the most expensive house on the street and other homes on the street are worth no higher than $275,000 that house may instead be worth less than $300,000 depending on what an actual buyer would be willing to pay. Pricing a home based on original purchase price or based on purchase price plus cost of upgrades is a surefire way to get the price wrong on the high side.
Pricing A Home Based On A Computer Generated Number
Whether a zestimate is used to price a home or an agent sends some other computer generated number without sufficient analysis of whether the number is valid or not chances are the price is inaccurate. Certainly if a computer generated value is negative most homeowners will not go with the low price. On the other hand when the computer generated number is high, homeowners are more willing to go with the higher number since there is the possibility of more profit when the home is finally sold. Getting more profit could not be further from the truth though, since a home will only sell for what a buyer is willing to pay. With as many homes that are on the market at any given time there are plenty of options for buyers. Buyers wanting the best value for their dollar will not be willing to overspend on a home when another home can serve the same purpose for less money. Pricing a home should not be based on a computer generated value unless that value can be backed up by actual data of recently sold homes with similar pricing.
One of the important things to pay attention to during the time a home is on the market is what the buyer feedback is saying. Homeowners also need to know to read between the lines and buyers not wanting to try and offend anyone sometimes will not come right out and say a home is overpriced. Instead the buyers may comment that the home lacks updates, has dated looks, needs TLC, or could use some freshening up. Certainly a seller can use that feedback to update the home, to freshen it up or more but that could mean taking the home off of the market while making those updates. Another way to take care of those issues is to reduce the price. The homeowner will not have to make the updates or give the home some TLC if the price accounts for the homes current condition.
On the other hand some buyers will come right out and say the home is priced too high. If a few buyers indicate the home price is too high the seller should take that into consideration and discuss with their real estate agent an appropriate amount to reduce the selling price by. Leaving the price high while buyers are actively saying the price is too high means the home will sit on the market without any offers. This will also require much steeper price drops in order to get attention after it has been sitting on the market for some time.
Lack Of Showings
The home has been prepared properly, everything has been updated that needs to be updated, the curb appeal is eye catching, the photographs of the home were done professionally yet there have not been many showings. The lack of showings over a couple week period even in a slower real estate market means the price is too high. A home may look great on the internet but when the homes price is above the range of many similar homes buyers have no reason to visit the high priced home. An immediate way to determine if a home is priced too high is to check the prices of homes for sale or recently sold in and around your direct neighborhood. If the home is the highest priced home on the street there is a problem.
When buyers know equivalent homes right next door or a few doors down are lower in price there is no reason for them to consider the high priced home regardless of the amenities. Maybe that high priced home has some great features and amenities but the other houses in the neighborhood don’t currently support that high price. Most buyers in fact will go look at other neighborhoods where homes are similarly priced and probably can even find the amenities that suit them at the price range. Homebuyers vote with their money and if your home is not attracting much or any buyer attention then the home has a pricing problem that needs to be addressed right away.
Listed With An Agent Who Agreed With A Higher Price
Sometimes real estate agents will “buy a listing” meaning they will agree to price the home where ever the homeowner desires or may suggest a higher price in order to beat out competing agents who also want to list the home for sale. The agent may or may not care about selling the home and may simply want their sign to be in front of the house for sale so they can get more clients. If the agent does want to sell the house after a few weeks of being on the market with little interest they will ask the seller to get aggressive and reduce the price in order to get buyer interest.
Failed To Meet Appraisal
If a home is being purchased with a mortgage then an appraisal is required. An appraisal will determine the value of a home for which the mortgage loan will be based on. If the home appraises for less than the contract offered price the sale may get cancelled if the buyer or seller can’t resolve the difference. While the appraisal happens after an offer has been accepted homeowners can pay for an appraisal on their own prior to listing the home on the market in order to see what the appraised price might be. So even if an offer does come in when the house is overpriced there is a good chance that deal will get cancelled if the appraisal says the homes value is lower.
Overpricing a home is one of the top reasons why homes fail to sell. The overpriced home is either going to sit on the market with very little buyer interest and no offers or it may get to the point where the homeowner has to push the home price down drastically in order to get it sold. By pricing a home properly from the start homeowners can ensure a faster sale.
- 8 Home Selling Pitfalls by Danny Margagliano
- How To Pick An Agent To Help Sell Your Home by Jamohl DeWald
- How Lighting Can Boost Your Home Value by Eric Jeanette
- Why Buyers Don't Offer On Overpriced Real Estate at TheBalance.com
About the author: The above article “6 Signs That Your Home Is Priced Too High” was provided by Luxury Real Estate Specialist Paul Sian. Paul can be reached at paul@CinciNKYRealEstate.com or by phone at 513-560-8002. If you’re thinking of selling or buying your investment or commercial business property I would love to share my marketing knowledge and expertise to help you. Contact me today!
I work in the following Greater Cincinnati, OH and Northern KY areas: Alexandria, Amberly, Amelia, Anderson Township, Cincinnati, Batavia, Blue Ash, Covington, Edgewood, Florence, Fort Mitchell, Fort Thomas, Hebron, Hyde Park, Indian Hill, Kenwood, Madeira, Mariemont, Milford, Montgomery, Mt. Washington, Newport, Newtown, Norwood, Taylor Mill, Terrace Park, Union Township, and Villa Hills.