How Do You Know if your property is overpriced?
Thousands of listings each year in Hampton Roads are taken off the market because they don’t sell. Nationally, it’s tens of thousands. And for each home seller, this represents a fundamental change or lack of change in their life. Moving from one house to another is a big deal, one that most Americans abhor doing – packing, unpacking, finding new local services, etc. It’s quite the pain, but it’s necessary and can be exciting no doubt.
However, many people never make that move because their property does not sell. And their property does not sell because it’s overpriced. I know, I know, every home seller hates to hear that – but it’s the truth. If you want a certain price for your house and you’re not getting it, you can either make significant adjustments to the property (which usually does not recover the cost of doing so), let the listing sit until potentially a buyer comes along, or lower your price. Those are really your three options. But let’s dive into how to know if your property is overpriced?
Market Snapshot
How did you arrive at your current list price? Did you go off the Zestimate, the assessed value, or just a price that you want to get? Or perhaps, do you not have much equity and need to hit a certain number to break even? There’s a variety of reasons why people list their house at a certain point.
No matter how you arrived at your list price, you need to realize buyer’s generally want to pay fair market value for a home, and they are consulted by their agents to look at recent home sales in your area. As a result, I’d probably look to see what homes in your neighborhood are selling for. I’d also have an agent look in the MLS to see what current listings are under contract, as that will give you the most up-to-date local knowledge. These are usually called “pending listings.”
Another note is to look at withdrawn listings. These are listings that never sold, and probably because they had major issues with the house or were overpriced. It’s important to distinguish between what properties sold for and what people tried to sell them for. Don’t be another withdrawn listing.
Upgrades = Higher Price, Right?
In many cases, no. You see a neighborhood can only support a certain dollar figure for a house. If you place a $500,000 home in a $200,000 home, it’s not going to be worth $500,000. Remember the old saying, “location, location, location.” My point is this: if you update your kitchen and refinish floors, that may not necessarily make your home more valuable. It will, however, make it much more salable/desirable and therefore sell faster – allowing you to move on, saving on utilities, taxes, insurance and more. It will also save you a lot of time and headache. But refinished floors do not equate to a higher price; it just equates to selling faster and maybe, just maybe a tad bit more and/or more negotiating power.
I see people double down when their property is not selling. “It must be the bathroom vanities.” Not exactly. Sometimes updating your house to simply get it market ready is a necessary evil – not doing so could certainly result in a lower price. So that’s an important distinction to make. Buying homes is a major financial decision, but like most things, it’s also very emotional. Fine. You can make major improvements to the property, but if you don’t take care of the basics – like curb appeal, cleaning the house, and decluttering, there’s a strong possibility buyers will never be able to appreciate the major upgrades you’ve done. Not always, but a lot of the times. It’s probably like going to a job interview – you may be an incredible candidate, the best in fact, but if you don’t even look ready to be interviewed, appear sluggish, and not ready to go, the interviewer may not even be able to see the great qualities in you.
The Best Way To Know Your Property is Overpriced
Get the feedback from agents and buyers! But not necessarily verbal or written feedback – if your home has been sitting for months at a certain price, it’s not priced appropriately in most cases. The market is telling you something. Now again, it’s up to determine what “overpriced” means; it’s different for everyone. But most people consider over priced as the following: a house with a list price that most buyers are not willing to pay in today’s current market. That’s it. So, if you have several months to years to sell a home, you may be able to wait it out – there definitely may be a buyer out there, but it just may take a long time. Most folks don’t have that luxury, or quite frankly, tolerance. There does come a lot of risk with holding onto properties.
However, many people never make that move because their property does not sell. And their property does not sell because it’s overpriced. I know, I know, every home seller hates to hear that – but it’s the truth. If you want a certain price for your house and you’re not getting it, you can either make significant adjustments to the property (which usually does not recover the cost of doing so), let the listing sit until potentially a buyer comes along, or lower your price. Those are really your three options. But let’s dive into how to know if your property is overpriced?
Market Snapshot
How did you arrive at your current list price? Did you go off the Zestimate, the assessed value, or just a price that you want to get? Or perhaps, do you not have much equity and need to hit a certain number to break even? There’s a variety of reasons why people list their house at a certain point.
No matter how you arrived at your list price, you need to realize buyer’s generally want to pay fair market value for a home, and they are consulted by their agents to look at recent home sales in your area. As a result, I’d probably look to see what homes in your neighborhood are selling for. I’d also have an agent look in the MLS to see what current listings are under contract, as that will give you the most up-to-date local knowledge. These are usually called “pending listings.”
Another note is to look at withdrawn listings. These are listings that never sold, and probably because they had major issues with the house or were overpriced. It’s important to distinguish between what properties sold for and what people tried to sell them for. Don’t be another withdrawn listing.
Upgrades = Higher Price, Right?
In many cases, no. You see a neighborhood can only support a certain dollar figure for a house. If you place a $500,000 home in a $200,000 home, it’s not going to be worth $500,000. Remember the old saying, “location, location, location.” My point is this: if you update your kitchen and refinish floors, that may not necessarily make your home more valuable. It will, however, make it much more salable/desirable and therefore sell faster – allowing you to move on, saving on utilities, taxes, insurance and more. It will also save you a lot of time and headache. But refinished floors do not equate to a higher price; it just equates to selling faster and maybe, just maybe a tad bit more and/or more negotiating power.
I see people double down when their property is not selling. “It must be the bathroom vanities.” Not exactly. Sometimes updating your house to simply get it market ready is a necessary evil – not doing so could certainly result in a lower price. So that’s an important distinction to make. Buying homes is a major financial decision, but like most things, it’s also very emotional. Fine. You can make major improvements to the property, but if you don’t take care of the basics – like curb appeal, cleaning the house, and decluttering, there’s a strong possibility buyers will never be able to appreciate the major upgrades you’ve done. Not always, but a lot of the times. It’s probably like going to a job interview – you may be an incredible candidate, the best in fact, but if you don’t even look ready to be interviewed, appear sluggish, and not ready to go, the interviewer may not even be able to see the great qualities in you.
The Best Way To Know Your Property is Overpriced
Get the feedback from agents and buyers! But not necessarily verbal or written feedback – if your home has been sitting for months at a certain price, it’s not priced appropriately in most cases. The market is telling you something. Now again, it’s up to determine what “overpriced” means; it’s different for everyone. But most people consider over priced as the following: a house with a list price that most buyers are not willing to pay in today’s current market. That’s it. So, if you have several months to years to sell a home, you may be able to wait it out – there definitely may be a buyer out there, but it just may take a long time. Most folks don’t have that luxury, or quite frankly, tolerance. There does come a lot of risk with holding onto properties.