Today's real estate market is undoubtedly a heightened environment for home sellers. With inventory consistently low and buyer interest at the highest levels we've seen in some time, many home sellers are getting fantastic offers with rapid list-to-close timelines.
How do they do it? Perfect pricing.
The "Lowering It Later" Mentality
Sellers tend to want to price their home higher than recommended. Their mentality is that if you start high, you can always reduce the price "later" - though, as the Keeping Current Matters blog so correctly states: When it comes to your sale, "there is no 'later.'"
In fact, research has shown that homes that undergo a listing price reduction both
A.) Sit on the market longer
B.) Sell for less than homes of a similar nature.
John Knight of the Eberhardt School of Business at the University of the Pacific elaborated on this idea with his study on "Listing Price, Time on the Market and Ultimate Selling Price", ultimately concluding that:
“Homes that underwent a price revision sold for less, and the greater the revision, the lower the selling price. Also, the longer the home remains on the market, the lower its ultimate selling price.”
Why the slower, less lucrative sale? Part of it comes down to the way in which prospective buyers view homes that reduce their list price as time goes on.
In practice, the "lower the price later" mentality paints a couple of pictures for prospective buyers, none of which allow your home to be seen in the best light. The first assumption that the buyer makes in viewing a home with a price reduction is simple: "Something must be wrong with this house." This mentality keeps buyers from ever fully seeing your home for what it is, or following through on the sales process.
If buyers overcome that hurdle, a second assumption then comes into play. Once they come to make an offer on your home, buyers may think: "We can low-ball this offer, since the seller seems highly motivated to sell." This creates a negotiation situation that favors the buyers, and may prevent you from making as much as possible from your sale.
How to Price Your Home Right From the Beginning
Naturally, the way to avoid these less-than-ideal scenarios is to price your home correctly from the very beginning. In a market as complicated and active as Chicagoland's, your best available resource for selling your home at the right price point is to connect with a real estate agent with a good amount of experience working in your area.
True real estate professionals use a wide variety of data to help determine the price point for your home, including market analysis, neighborhood records, and a solid understanding of the housing market both at large and in your specific area. Select a real estate agent that will take the time to fully explain the state of the market in your area, how it applies to your home, and who is able to clearly articulate their reasoning for their determined price for your home.
In short? You want an agent that will tell you what you need to know, and not just what you want to hear! This will ensure your home in the best position to sell as quickly as possible, for the best possible price. You'd be amazed what a communicative, knowledgeable real estate agent is able to accomplish when working with a seller in the right frame of mind; here at Real Group, for instance, we are typically able to sell our clients' homes at within a few percentage points of list price, generally above the MLS average. But this takes work - including a careful analysis of timing, season, neighborhood, and current market conditions.
Looking to sell your home and unsure of where to start? Need guidance or have a few questions you want answered before you really get going on that sale? We're here and happy to help you with whatever you need! Don't hesitate to send us an email or give us a call today.
