Beware Of This When Pricing Your Home…..
In my real estate career I've called a lot of for sale by owners and expired listings. I've had the privilege of connecting with a lot of homeowners.
There are several tendencies I noticed about expired listing homeowners and for sale by owners. Common things I hear are " I don't want to pay a realtor", " Find me a buyer and I'll give you three percent" or " I'm not selling unless it's for a million dollars".
I get it. In some cases the homeowners are right. They aren't stupid. However, there's something I want to point out in this blog post I believe homeowners should be aware about.
When speaking to homeowners I'd hear stories such as "oh my God, last month I put in a golden toilet in my guest bathroom, I planted a mango tree in my backyard, it's producing 5 lbs mangos and everyone came over on Saturday because I made mango smoothies. There's no way I'm listing my house for less than a million dollars."
Of course I'm exaggerating, and you have the right to list your home for a million dollars. If I were your realtor and you wanted me to list your home for $3 million I'm not going to argue with you.
The only thing I will do is show you the market conditions such as closed sales and active listings. I'd also remind you that there most likely there will be an appraiser involved.
When an appraiser is involved his/her job is to make sure the house is priced justly in comparison to other homes like yours. What this means to you is if I agree to list your home for a million dollars but other homes like yours are getting sold for $450,000 the appraiser will not condone a million dollar loan to the buyer for your home.
I understand your home is dear to your heart. It probably was your first home when you and your spouse got married and you guys pulled money from your piggy bank for a down payment. Then 15 years later you remodel the bathroom, put on a new roof and have a built-in specialized closet for little Johnny.
Due to the emotional emotions associated with your home it's understandable to want to list high. I probably would feel the same way.
Just keep in mind, if the person you accepted the offer for is not a cash buyer and they're financing the home, the lender will hire an appraiser and numbers don't lie. It will be a challenge if you're not willing to go down on price.
If I list your home for $2 million dollars making big promises, 6 months have passed by and nothing happens you'll be upset.
What I will encourage is a price drop contingency. What this means is in the listing agreement I'd say " if by 3 weeks there's no showings the price will drop by $10,000. If by 2 months there's no offer we will drop the price by $40,000." The way there is flexibility and you're not just stuck.
With that being said homeowners please beware of overpricing your home and not being flexible. You can price your home for whatever you like. I'm not going to argue. But be aware an appraiser most likely will be involved if the buyer is financing.
I hope this helps please reach out if you have any other questions..