Is Selling Above Market Value Do-able?
When people try to sell their home through a traditional real estate agent, they usually have to figure out what price they’re willing to list their home. A good real estate agent will be able to look at comparable properties in the neighborhood, see what they sold at recently, and develop an estimated range in which the home should be priced. This is when things get hairy because when a seller is presented with a range they almost always gravitate towards more money.
This is just the way the game is played, when you control the property you want as much money for it as possible. Why would someone willingly take less if they have the time and comfort to sit on the market? But if the seller chooses the highest price possible, they may find that the market isn’t kind to them and will be priced right out of the buyer’s interest. Since real estate fluctuates the market can drop and the seller can find themselves priced so far above market conditions that the competition looks more favorable.
Data or Emotions? Finding the Right Price
Usually sellers based their pricing on emotions, and half collected data. It’s tempting for sellers to jack up the price to a number that doesn’t make sense, all because they got on Zillow and saw a home sell at some astronomical price. Many sellers will try to base their price on a home that was listed over a year ago, or on an expired listing, both of which are poor judgments of value. On the other hand, properties that sell best are based on comparable properties that are very similar in bed, bath and squarefoot count, in the same neighborhood and have sold recently. Homes priced on this data are very reliable since the market is telling you what it costs, not one’s emotions.
But one of the main reason a buyer will never make an offer on an above market priced property, is it never comes under the buyer’s radar. Most traditional buyers working with an agent won’t see overpriced properties because a good agent will help their buyer stay out of bad deals. If a buyer never discovers the house they won’t see the house, step inside the house and more than likely never make an offer on the house.
Find that Sweet Spot
According to Home Buying you’ll know when your reaching that line between overpriced and just right when the offers stop. But before you reach that point you can look at the home values in your neighborhood, and if the list price is above 10% of the market value in an area traditionally priced bellow 1 million, then expect a difficult time selling your home. If you find your home in the top 25% above market value, then enjoy staring at your for sale sign in the front yard. But you should be able to price between -3% and +3% without scaring away realtors and buyers.