Thursday, March 23, 2017 / by Jason Huerkamp
In today's market, Sellers know that there is low inventory and their home will be one of only a few for qualified buyers to choose from. Because of that, they feel that they can get more for their property than the agents want to price it for right now. Should they put a higher price on their property?
When we have a busy real estate market there are more real estate agents who come into the industry and either they don't have the experience and they are out there showing homes and making sales. When there is a listing to be had, the Seller will inevitably invite a few people in to give him a valuation on his property. There will always be one or two who will go in with a higher price, in order to get a good chance of getting the mandate to sell that home. The Seller wants to hear that the home will get more and the agent who wants the mandate may be inclined to accept a mandate at that higher price, stating that its probably "worth trying." The reality is, they are unlikely to sell it for the mandated price, but with a longer time period to sell, the Seller will get bored of waiting and the price improvements will begin and the agent will ultimately get paid.
How Does The Buyer Search for Homes?
The Buyer searches for homes on the internet. He searches in price bands, lets say $200,000 to $250,000. The home that should have been priced at $240,000 is priced at $300,000 and the buyer who should be looking at that home is not even seeing it. The Sellers home is priced amongst homes in the $250,000 to $300,000 price band with homes that may have more rooms, bigger land or more square footage. The Sellers home is not likely to be seen by the right buyer, because the $240,000 buyer, nor his agent, is searching above the $250,000 price band.
If there are no showings on the property in the first week, the Agents are telling you the Seller, that the price is too high for them to let their clients see. If there are showings and no offers, the buyer is telling you the Seller, that the price is too high. At that point you have a price improvement to $255,000. Your $240,000 buyer is still not seeing the property. This short video will explain what happens when buyers search for homes.
The fact of the matter is that the Seller could have sold his home in a shorter time at an aggressive but realistic price, with less heartache. Beware of inexperienced or unscrupulous agents putting a bigger price tag on your home than its worth, which could cost you at the end of the day, and you may have re-list your home with difficult consequences.