When you decide to sell your house, your primary goal is typically to sell it quickly and for the highest possible price. However, many sellers are currently aiming too high without realizing that the market dynamics have changed due to increased inventory. The result? A rise in price reductions that might not be necessary. Here’s an explanation.
Recent data from Realtor.com reveals that February saw the highest number of price cuts recorded in any February since 2019 (as illustrated in the graph below). Considering that 2019 represents the last truly stable year for the housing market, this is significant. We are moving back toward a more typical market environment.
This is not the same frantic seller’s market we experienced a few years ago. You might not be able to command the same price that your neighbor received at the peak of the pandemic. This reality may require you to adjust your expectations.
Here’s the truth: If you price your home too high and later need to reduce the price, you could end up receiving lower offers than if you had set a realistic price from the beginning. So, how can you avoid this situation? By relying on your real estate agent.
How an Agent Can Help You Set the Right Price
An effective agent doesn’t just make arbitrary price suggestions; they base their recommendations on real data and current market trends to ensure your home is priced according to its true value today. This approach establishes a sensible price that attracts serious buyers.
Based on your agent’s assessment of your local market, they might even suggest pricing your home slightly below market value to attract more attention and stimulate competitive offers. Here’s how your agent will determine the ideal price for your property:
- Examine Recent Sales: Your agent reviews what similar homes in your area have actually sold for, not just their listing prices.
- Analyze Local Market Trends: Home values are determined not only by your expectations but also by what buyers in your area are willing to pay
- Develop a Strategic Plan: They will ensure your home is priced to capture interest and create urgency among potential buyers.
The Consequences of Overpricing
Some sellers choose to ignore their agent’s advice and start with a high price, hoping to achieve their full asking price or leave room for negotiation. However, pricing too high often leads to costly consequenceBuyers May Avoid It: Today’s buyers are increasingly budget-conscious. If they perceive a home as overpriced, they may skip it entirely rather than attempting to negotiate.
- Extended Time on the Market: The longer a property remains unsold, the more likely buyers will suspect that something is wrong with it, which can complicate future sale efforts.
- Potentially Lower Offers: Homes that require a price reduction frequently sell for less than they would have if they had been accurately priced initially.
This trend is illustrated in the graph below, which uses data from the National Association of Realtors (NAR) to demonstrate that the longer a house lingers on the market, the less it typically sells for.
The graph indicates that homes sold within the first four weeks of listing typically achieve their full asking price. Based on experience, this is true for homes priced at or just below current market value. When priced appropriately, buyers show more interest and may even be willing to pay the asking price or more, driven by competition.
In contrast, if a home is overpriced, it will likely remain listed for a longer period, resulting in declining interest. Consequently, sellers may find themselves accepting lower offers or forced to lower their price to regain buyer attention.
In Conclusion
Listing your home at too high a price can lead to prolonged market exposure and a subsequent need to reduce the price to attract buyers. To avoid this scenario, consult with a local agent.
If you want to ensure your home sells quickly and at the best possible price, reach out to an agent to discuss the most effective pricing strategy for your property.
