Don’t miss out on this low inventory phenomenon.
Today inventories are very low and the demand for housing has increased exponentially, but if a seller prices their home too high they may miss this very narrow window of opportunity to sell their home with little to no competition.
Due to the low housing inventory, homes that come on the market that are priced lower than market value tend to sell fast while getting several offers that increase the selling price up to the market value. However, if the home is priced significantly higher than the market value, the home will not get any showings and will sit on the market until the seller decides it is time to reduce the price.
If the seller waits too long to lower the price, it may be too late, as the lower inventory phenomenon may be gone and the increased competition may cause the home to sell for less than what the seller could have gotten if the home was priced closer to or under the market value.
The primary reason for not over pricing your home is that most buyers need a loan to purchase a home. During the loan process, the lender will require an appraisal be completed to determine the value of the home. An appraisal is based on what homes have sold in the last six months that are similar to the home being sold. Therefore, even if the buyer is willing to pay want the seller wants for an overpriced home; the lender will not agree to give the buyer the loan for more than what the appraiser has indicated as the value.
Cash buyers not needing an appraisal tend to be very shrewd and will not pay over the market value. Most cash buyer demand to buy homes below the market value because of the added benefit to the seller of being able to close an escrow in a very short time without the added risk of not qualifying for a loan.
If it has been over six months since any homes have sold in your neighborhood, my suggestion would be to look at the very last market sales and increase the asking price two to five present higher. If you use this strategy, you may get several buyers bidding on your home and the price will increase or decrease to the market value.
Recently, I have noticed several homes on the market priced one hundred thousand dollars over what similar homes sold for in 2012. Yes, it is possible to sell your home for more money today compared to a last year, but is it is not likely you will be able to convince a buyer to pay much more.
Because of the internet, most buyers do a significant amount of research and can see from the photographs what the home looks like. If buyers see that the home on the next block or similar neighborhood is priced lower, they will wonder why your home is priced high and wait to view the home after the price has been reduced closer to market value.
Buyers look at homes based on their price point, and if a home is priced too high compared to other similar homes they will usually not want to view the home. If they do decide to look at your overpriced home, they will be disappointed, as they have recently looked at homes in that price point that are better for the same amount of money. So, if you price your home based on your competition and recent sales, you will attract buyers that fit that price point and your home will be considered along with the other homes.
If you are thinking about selling your home, because of the lower inventories, and little to no competition, it may be the best time ever to sell your home. Give me a call and I will be happy to appraise your home to determine the market value, and you will avoid over pricing your home and get the highest price possible in this amazing real estate market.
David Norwood-Central Coast Real Estate David@DNorwood.com 805-471-0828