Initial Price will Affect Sales Price

The age of the internet is here and it has empowered people looking to buy including people looking to buy homes. If you know how to type text into a search engine then you know how to search for public information about home size, condition, sales history, current inventory, recent sales, photographs, videos, school info, drive-times, entertainment and much more.

It is our responsibility as Realtors® to educate our sellers on the fact that 95 percent of buyers start their search on the internet and because they are armed with facts about your home they are unlikely to pay more than the home is worth.

Pricing a home too high when it first goes on the market could adversely affect the final sales price since the home might stay on the market longer than it should. People will naturally assume that something is wrong with the home if it didn’t sell within a reasonable market time.

But pricing a home for sale properly, in the beginning, is the best way for the seller to maximize the equity in their home. Overpricing a home can reduce the number of buyers interested in home in that price range. It can also deter some Realtors® who either don’t have buyers in that price range or make them think there is an issue with the home.

Buyers are bargain shoppers! After touring homes in their specific price range, they expect to see similar amenities in every home. If a home is overpriced, it will not compare favorably with the other homes. This may force the buyer into thinking another home is a bargain because it has so much more for so much less.

Buyers view homes that meet their needs first and wants second. They will select the one that meets most of those whether it is priced right or has the amenities. An overpriced home for sale doesn’t compete well and it often extends market time. A documented study has shown that the longer a home stays on the market, the lower the sales price will be.

As a Realtor®, it is essential that we give our sellers factual information in pricing their home to favorably compete in the current market. Some of the obstacles can include:

  • Failure to objectively compare the current and sold homes with theirs
  • Neighbors who mislead the seller as to how much they got for their home
  • Fear of making a mistake and thinking they can start high and always lower the price
  • Loss of perspective because the seller is emotionally involved
  • Expecting the home to sell for more than fair market value because they need the money
  • Agents who will accept a listing at any price in order to tie up the property until the seller realizes the price is too high

As a seller, what you paid for the home or what the cost may be to rebuild the home does not affect the current market value. Neither does spending money on home improvements that were made to increase their own enjoyment or pleasure.

Do not expect a buyer to pay more than the current market value for your home. A seller will set the price but a buyer will determine the value. If the home is priced properly in the beginning, it will sell in a short period of time with fewer problems and likely will sell for a higher price.

The chart below shows a comparison in Fairfax, VA of the original list price versus actual sold price between November 2018 and October 3, 2019. As you can see, throughout most months the actual sold price was below the original listed price on residential homes for sale. Only in June 2019, did we see actual sale price jump above listed price by a smidge. New listings have been an issue in Fairfax, VA. We saw a jump over 2,000 between March-May 2019 but every other month has been below 2,000 with September coming in at 1,665 homes for sale.

Want Some Insider Information on Fairfax VA homes for sale? Get a FREE Market Snapshot Report of Your Northern Virginia Home’s Value, or  Search All Northern Virginia Homes For Sale. Put that data you need at the tips of your fingers!

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