The Pitfalls of Overpricing Your Home

Why is overpricing your home so damaging?  Simple put, the house won’t sell!  Sure, it may eventually sell, but in my expert opinion, it will sell for less than it should have, if it had been priced correctly in the first place.  This article addresses the key pitfalls of overpricing and why you should avoid them.

The process of selling your home, likely your most priced possession, is an emotional one.  The reality of the situation though is once you decide to list your house, it becomes a business transaction.  A commodity for sale in the real estate market. 

Today’s home buyer is savvy, paying attention to what’s selling and for how much, and is likely driving their own real estate search online.  Although everyone likes a deal, realistic buyers are prepared to pay fair market value for a home.  If paired with a realistic seller, a successful real estate transaction will ensue. 

Everything done in the listing and selling process is meant to accomplish one goal; sell the house! Certainly there are factors that can increase the likelihood of getting top dollar for your home, ranging from professional staging, having all repairs completed, professional photos, and a solid online marketing plan to name a few.  All this aside, the price the market will bear is still the most important factor in the sale of your home.

There is not always a direct correlation between money invested and price going up.

A common mistake with home sellers who overprice is the false belief that every home improvement translates into a dollar for dollar increase in value. Unfortunately that is not the case in real estate valuation. Some upgrades have very little return on investment when selling a house.

Pricing your home too high – because you paid a certain amount for it, because you have so much into it with upgrades, landscaping, installed a pool, etc, or solely because it means so much to you – is a surefire way to stall the successful sale of your home.

Buyers don’t care that you need X amount of dollars to pay off your line of credit, pay out your mortgage, or buy your next house. None of these factors influence the actual market value of a house.  These are YOU problems.  Why should the buyer inherit them?  All a buyer cares about is paying what is fair.

You are free to list your home for any price you choose. However, any quality real estate agent will tell you that overpricing a home can lead to serious pitfalls.

Real estate agents are in the business of selling houses, and a good REALTOR® wants to work with clients who hold realistic expectations. When sellers demand an unreasonable listing price, many agents will avoid taking the listing as they know it is doomed to fail. 

Past experience, and expertise tells them, this listing will only cost time and money.  Agents only get paid after a listing has sold.  Nobody wants to work for free, invest their time and resources, and not see it through to fruition. 

There is a direct financial impact to REALTORS® when they take a listing, from professional photos, lawn signs, electronic lockboxes, as well as marketing and advertising costs.  Your agent will invest hundreds of dollars to help you get your home sold.  They want it to sell for top dollar and will give you helpful tips and advise to help you prepare the home for sale, help you negotiate favourable terms once you get an offer, and happily place a SOLD sign on your lawn. 

You need to meet them halfway.  They can’t achieve the mutual goal of selling your house if the asking price is unrealistic, and not in line with fair market value. 

Attracting the Wrong Kind of Agent

A good agent will tell you honestly that you want more for your home than you can reasonably expect. However, there are also agents out there who will tell you exactly what you want to hear.  In the industry, we call this “buying your listing”.

Overpricing a home is part of their strategy to get your listing. They will encourage your high expectations only to tell you later that you are overpriced. 

I know what you’re thinking: Why in the world would an agent want to take a listing they have no chance of selling?

Here’s their strategy:

  • A Signed Contract.  You may pick them over a good agent because they told you your house was worth more.  At the very least, you are locked into a 90 day contract with them.
  • Advertising:  They are using your home to pick up buyer clients to sell them something; not necessarily your home. They want to have their sign on your lawn in hopes of attracting other listing clients in the neighbourhood.  Your neighbours may be enticed by your over inflated price and hope they can sell for that too.
  • Ask for a Price Reduction:  As little as a week after signing, with little to no showing activity,  they will inform you that the price is too high, that they “overshot the mark” and you need to reduce your price in order to attract buyers. 

Don’t let listing price be the top criteria for picking the right REALTOR®.  Remember, this may only be a tactic to “buy your listing”.  Instead ask questions like:

  • How many successful real estate transactions have you completed in the last 12 months?
  • What’s your average list to sale ratio from your original sale price prediction in the last 12 months?  What’s the average for the local market as a whole?
  • What’s your average days on market for homes you’ve listed in the last 12 months?  What’s the average for the local market as a whole? 
  • How many of your listings in the last 12 months had to reduce their price before a successful sale was achieved.
  • How many of your listings failed to sell? 

Overpricing homes is part of an unscrupulous agent’s game plan. There are a lot of great real estate agents out there with integrity who won’t overprice your home.  It is your job to find one!

Lack of Buyers Looking

Any knowledgeable agent will tell you the most interest and activity on your home will be when it first hits the market.  Over the next five weeks, if the house hasn’t already received an accepted offer, the interest will wane. 

From day one, the last thing a seller wants is a lack of buyer activity. When you overprice, you lose the interest of quality buyers.

Early Buyer Activity is Crucial

Overpricing your property scares off prospective buyers who may be serious about an offer as they will pick up that a property is overvalued for its worth and will end up looking elsewhere. A home in your immediate area could be sold within a matter of days or weeks if it is marketed at the right price.

Keep this in mind, when a home is overpriced, it will actually help other homes for sale in the neighbourhood sell.

Sellers will often say, “Can we at least try it at the higher price? Won’t they still come and see it and just offer less?”

The answer is a resounding NO.  When agents price a listing they are using data from completed sales that compare to your home.  Criteria such as the average list to sale ratio for comparable properties, days on market, and the current state of the real estate market in the area, all play a roll in determining fair market value.  Agents make an educated guess on what the house should sell for and suggest an appropriate list price. 

Buyers are working with agents who will inform their clients:

  • Based on comparable sales, the home is overpriced, and advise them not to see it.
  • Sellers who overprice their homes are generally not very negotiable. Why would they be reasonable to negotiate with when they grossly overprice their home?  On average homes should sell between 97-98% of the list price.  The buyers agent will advise the client not to waste their time considering the house.
  • This home is out of their price budget.  The agent will dissuade their clients from looking at homes outside their budget.  Sadly for the seller, this could have been avoided if the home was actually listed closer to fair market value.  You have lost a serious potential buyer.

Extended Marketing Time

In Real Estate, sellers fail to understand, time is your enemy. An inflated list price will cause your house to languish on the market as the days and weeks roll on with little to no activity.

There is an ideal time frame to sell a home, and it usually falls within the first 5- 6 weeks the home is on the market. Most agents take listings from 90-120 days.  If the listing fails to sell within that time period, you risk having your listing expire – extended days on market or an expired listing will stigmatize your property.

REALTORS® cringe when a seller says, “I’m in no hurry to sell, I can wait for my price.  I can always reduce my price later if it doesn’t sell.” Besides indicating a lack of motivation to sell, this kind of thinking is a huge mistake. 

The number one question every buyer asks their agent when looking at a home is:

“How long has this property been on the market?”

When a listing is fresh on the market sellers have the upper hand and buyers know this.  If they want a particular home, they know that they have to be reasonable about the price they offer.  When a home is new to the market, it hasn’t had a lot of exposure yet.  Sellers and their agents will agree to hold out for serious offers, closer to asking price, when I listing first hits the market.  This is especially true if both the agent and seller feel strongly that they priced the house at a fair market value.

After a listing has had adequate exposure on the market, without a successful sale, the pendulum swings the other way. Now the buyer will feel as though they are in the driver’s seat. Buyers equate extended days on market with factors such as:

  • “There must be a reason it hasn’t sold yet?  Is there something wrong with the property?”
  • “The seller must be getting desperate, let’s make a low offer and see if they take it.”

This is because the days on the market heavily influences what a buyer is willing to pay for your home.  Contrary to what many home sellers think, overpricing a home does not lead to a higher sale price. It is the exact opposite.

Home Appraisals

Unless you have an all cash offer — and let’s face it, that’s not the norm — banks will order an appraisal for any property they will loan money for purchase. Even if a buyer has agreed to pay your inflated price, the appraiser only cares about one thing: fair market value. The market rules the appraiser, and he or she will appraise your property accordingly.

When the appraiser comes back with a valuation, noticeably lower than the price the buyer is offering, the bank will balk at giving the buyer a mortgage. This can take you from a successful sale to a denied mortgage application, leaving you looking for further buyers or accepting a lower price.

Solution: A Realistic Price

Often times in a listing presentation, a seller will shut down and stop listening to an agent’s recommendation on price as soon as the number is south of what they are hoping for.  Despite the proven sales data in front of them, they are stuck on a number that they believe their home is worth. 

When the listing fails to sell, unrealistic sellers will find every excuse in the book why the home hasn’t sold, most commonly blaming the agent, instead of being objective about the obvious fact their home is overpriced.

Imagine the following scenario.  Your home has been listed for sale for the last 3 months.  You’ve had little to no showing activity on the home and you are disappointed that the home hasn’t received an offer yet.  Consider the following questions:

  • Do you have an undesirable property? 
  • Is it in a bad neighbourhood?
  • What’s the state of the market? Is it a buyer’s or seller’s market or is there just not a lot of people buying right now?

Provided your answers to the above questions are you have a beautiful home, in a desirable neighbourhood in a robust market, there is only one obvious answer.  The home is overpriced.  Buyer’s are not prepared to buy what you are peddling. 

The take away is this.  Find yourself an honest real estate agent and listen, with an open mind, to their expert advice on price. Many will advise you that it is better to list a little lower, and encourage a bidding war, than risk all of the problems that listing too high brings. Stay realistic in your pricing, and accomplish your ultimate goal of selling your home.

And remember this: The most important factor for selling your home is the listing price you set from day one.  All of the marketing and advertising in the world will not sell an overpriced home. 

2 Story For Sale in Ellershouse, Ellershouse

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Endless Possibilities!

•  3110 sqft , 2 bath , 1 half bath , 5 bdrm 2 story FOR SALE  CAD439,000 .
MLS® 202013896

Zoned General Resource (GR) and encompassing 4.59 acres of country living, abound with opportunity, sits this one of a kind property. Reminiscent of a secret garden, you are surrounded by mature trees, lush perennial gardens and unique design features including a flagstone path, a pond with waterfall, expansive verandas, barbecue nook, a resort-style sun terrace, garden house and hummingbirds galore! The main house offers 3100 SQF of finished living space, including a newly renovated kitchen with gleaming quartz counters,(2020) custom hardwood cabinetry, three fully renovated bathrooms, with solid surface counters, 4 bedrooms upstairs, including master with newly added ensuite (2018) and impressive walk in closet. The bright, and airy kitchen, designed for entertaining and family gatherings, flows nicely into the dining room and formal living room, with beautiful hardwood flooring. Family room with built-in cabinetry, main floor laundry, generous foyers, and a powder room complete this level. Bonus room over the garage makes a great office, games room, or 5th bedroom and has its own private balcony. The one owner property has two, new ductless heat pumps for heating and cooling, as well as a newer wood furnace. The second floor has been fully renovated with the addition of an ensuite and walk-in closet off the master bedroom, plus new light fixtures throughout the home, and LED pot lighting on the main floor. This classic country home is warm and inviting; a haven of complete privacy and tranquility you will enjoy coming home to at the end of a busy day. The property also includes a two-car attached garage with direct access to the basement and an additional 22 x31 detached garage with second floor loft, which had been converted from a 3 stall horse barn. With GR zoning, there is so much you can do with this property including ample space for a horse paddock which this seller use to have. Whether you are dreaming of a hobby farm, a home based business, or just your country living just 30 minutes out of the city, this home can be your own private sanctuary. Be sure to view the full photo gallery on the virtual tour link on REALTOR.CA

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Why Staging Your Home For Sale Is So Important

First impressions generally impact our decision-making. Therefore, a properly staged home usually has a better chance of selling at a higher price than one that hasn’t. Here are 4 reasons you should consider staging your home for sale.

Staged Living Room

Sell Faster for a Higher Price

Effective staging will help sellers get their home sold quicker, for a higher price.  Although it’s hard to estimate how much, sellers who stage their homes often sell for a higher price than homes that are not staged. 

When a home is shown in its best light, buyers are excited to imagine themselves living there. When potential buyers can see themselves living in your home, they will be motivated to make a competitive offer.

That Certain “Je Ne Sais Quoi”

A euphemism to express a desirable trait about something that can’t be explained, simply put, staged homes just look more appealing.

Stagers know how to professionally present homes attractively, appealing to a broader spectrum of buyers. Also, professional photos of a staged home are likely to draw more interest online.  

A Place for Everything and Everything in it’s Place

Personal clutter can often hinder a potential buyer’s ability to visualize themselves living in a home. Staging and depersonalizing a home allows buyers to objectively view the property, so that they can see themselves in the space.

A professional stager will help sort out what things need to be packed and stored away to make your home feel more spacious, clean, and organized.  If you can live without it while you are trying to sell, it should be packed now.

A Great First Impression

Do not underestimate the value of a great first impression. This starts the minute buyers enter the driveway.  Not only will stagers evaluated the inside of your home, they will also assess what needs to be done outside to create great curb appeal.

A REALTOR’S® GUIDE TO LANDSCAPING

A REALTOR’S® Guide to Better Landscaping

When it comes to Listing and Selling for top dollar, landscaping is an opportunity to show off pride of ownership and a chance to create a positive first impression for potential buyers. 

Consider these four budget-and curb-friendly tips to upgrade your home’s Curb Appeal:

  1. Get Gardening – A home with just a basic lawn will need a little help to create interesting, modern curb appeal.  Consider adding a well organized flower bed.  Perennials and shrubbery, are a cost effective way to achieve this.  Take a picture of the space you are considering planting your bed and bring it with you when you head to your local nursery.  The specialists there will be able to help you select the right plants for your bed size, and zone.  Consider, the mature size of these plants as well as proper spacing.  Plant in uneven numbers, and consider symmetry when planning your bed.  It helps to draw out the bed with pen and paper and have have a planned layout.
  2. Lawn-care, Weeding & Pruning – Overgrown and patchy lawns are unsightly and are often an easy fix with seed and feed.  Set up a water sprinkler and get growing. Any weeds coming up in lawns, cracks, flower beds or bushes, need to be removed. Consider using landscaping fabric for extra protection against unwanted weeds. Overgrown trees, hedges, and shrubs block light, look unkept, and affect the overall look of your home. Use a good pair of sheers or a hedge trimmer to shape and trim back overgrown plants.  It’s like giving your greenery a hair cut.

  3. Bed Edging – Edging is a great way to define your garden beds. To achieve the look, grab an edger and create clean curves and lines around your beds.  Consider adding fresh mulch or other bed defining materials such as beach pebble to really make your property pop.

  4. Planters – Another cost effective way to add a pop of colour, and curb appeal is through the placement of colourful annual planters.  Keep them deadheaded and watered and potential buyers will be delighted when they arrive.

2 Story For Sale in Cole Harbour, Dartmouth

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Golden Opportunity!

•  1480 sqft , 1 bath , 1 half bath , 4 bdrm 2 story FOR SALE  CAD215 . Hot Listing
MLS® 202012711

A rare opportunity! Here is your chance to call this upgraded house, nestled on a mature, private lot, home. The definition of move in ready, with upgrades that include, new roof, soffits, and eaves-troughs (2019) front siding (2018) front deck (2020), new furnace(2018), fibre glass oil tank (2015), Selkirk chimney (2015) new 200 amp electrical panel (2018), plus most windows and doors have been replaced between 2006-2011. Inside upgrades include bespoke kitchen with beautiful glass backsplash (2016), new laminate flooring within the last 3 years, new carpet on stairs (2019), and freshly painted throughout. All new plumbing fixtures, as well as door hardware throughout, plus both the range hood microwave and dishwasher were replaced within the last 3 years. The home offers a functional layout and boasts 4 bedrooms in total. The lower level bedroom would also make great flex space as a den/office if a fourth bedroom is not required, however makes a great space for the teenager at home. There is also a powder room conveniently located on the lower level. Just off the eat-in kitchen, beyond the french doors, awaits your own, lush, backyard oasis. Fully fenced yard, with mature landscaping, complete with a shed and playhouse. You will be the envy of your guests who come to visit, excellent for entertaining and wired for hot tub. This home will be gone fast!

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2 Story For Sale in Cole Harbour, Dartmouth

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Charming Family Home in Great Neighbourhood

•  2268 sqft , 1 bath , 1 half bath , 4 bdrm 2 story FOR SALE  CAD249,900 . Exclusive!

Newly installed Lennox, 30,000 BTU 3 head mini split heat pump (August 2019)with transferrable warranty! Over 2200 sqt of finished living space, this home is one of the larger detached homes located on Silistria Dr, a popular family-friendly street in Cole Harbour. This immaculately maintained, carpet free home features 3 bedrooms up with a cheater ensuite bathroom, and a huge walk-in closet off the master bedroom. On the main level is a large and functional eat-in kitchen, which opens up to the formal dining room, overlooking the new back deck(April 2018) and private, fully fenced backyard; great for entertaining and summer BBQ’s! The living room is bright with new windows and beautiful Boston header mouldings, decorative wall trim, and crown mouldings, which are throughout the entire main level. Lower level features a rec room with rough-in for pellet stove, a large 4th bedroom, currently used as music room, and a large laundry room, as well as plenty of storage space. This home has been extensively renovated by the current owners including, New Siding (2017), New Exterior Doors, Mostly New Windows, New High Quality Flooring throughout top 2 levels, New Hardwood Stairs and railing + wrought iron spindles, freshly painted throughout, all new appliances(Sept 2018), updated kitchen cabinets and headers, all new decor light switches and electrical face plates, many new light fixtures throughout, front steps replaced in the last 4 years, hot water heater within the last 5 years, and the list goes on. Act fast because in this market, this listing won’t last!

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