In a sellers market, not every house sells quick or above list price
When real estate favors a particular side, in this case the seller, a home for sale tends to be listed for more money than it is worth in an average market. Unfortunately, many real estate agents do not do enough diligence. They simply recommend a price based upon the same tools that consumers use. Search tools include Zillow, Realtor.com, Trulia, Redfin, and many more. All of these websites collect public data to predict a potential homes value as a price.
Prices are ultimately set by sold comparable homes
We work with real estate agents all the time. I myself am a Connecticut licensed real estate agent. To determine the price of a home, when preparing to list it, we look at all the facts and features about the house and compare those to other recently sold homes. For the sake of this post, let us assume the house being listed does not require any repairs and is “move-in ready.” This is where the risk and reward comes in for sellers.
A. Risk of selling you’re home too aggressively
Let’s start with the risk. If you get too aggressive with the price on a home, simply because the market is in a sellers favor, you may find buyers pulling back and not viewing or offering for the sale of the house. This is a risk because it will cause the seller than to sit on market for a longer period of time, potentially have to reduce price more aggressively, or take lower offers.
A house that sits on the market for a period longer than the “days on market“ average, get immediate warning flags attached to it by consumers. A home seller needs to understand this number. Because the longer he home sits on market, the less consumers take confidence in the price and ultimately interest in the home goes away until it lowers dramatically in price.
B. “Go big or go home“
That is the reward. If you list your house for sale above the comparable sold prices, in a seller market, you may still get it. It comes down to buy your opinion. If your home needs updates, but it’s in a highly desired location or offers other features and functions that outweigh the lack of updates, buyers May reward you despite it being over priced.
The price and value of a home is ultimately set by one party. Seller does not set price. A real estate agent does not set price. Nor does a bank or lender of any sort. And appraisers also do not set the home value. It is the Buyers. The value of anything is determined by the price a person is willing to pay for it. So buyers ultimately set home values. Buyers continuing to pay market prices will keep those prices elevated. When the Buyers stop paying the listed prices, prices will come down.
How do I avoid the risk of selling my home?
If your house is for sale, or you’re thinking of selling your house, and it doesn’t have all the great updates that buyers are looking for you may need alternatives.
The most obvious option people throw around is doing a direct, off market sale to an individual or company. This is typically thought of as the investor purchase. But sometimes doing a “for sale by owner“ will result in the sale of the house to another individual as a primary residence.
There are other options as well, and they still include selling the house on the MLS (typical listing of a home). Reducing the risk starts with getting all the facts straight about what the home value is, and what to expect from the listing.
GLG Homes offers options
My company, GLG Homes, eyes houses. We partner with other organizations for sellers who look to list their house instead of selling it direct. But regardless of how you want to sell a house, be informed. I am always happy to help people and there’s never an obligation to simply gaining information.
Call me or text me if you want more information about your home and its value regardless of the market. 203-486-8868. I look forward to talking to you.