This is the latest in my home selling tips. The home selling process could be longer than you think if you over price your home or do not take steps to make your home sale ready. Some home sellers do not understand the importance of preparing their home for sale. Today's home buyers are different than home buyers in the early 2000's. Todays home buyer's are more sophisticated. They have so much real estate knowledge at their finger tips. It is amazing how many buyer do tremendous amount of research before they even go out to see a home. Todays buyers are not stupid. They have access to the same data real estate agents do if they take time to research it. Buyers ask for recent sold comparables. So they know when a home is over priced. They usually will not over pay. Let's walk through the pricing process and reasons behind pricing.
Home sellers and real estate agents walk a fine line of underpricing a home and overpricing the home. A seller will always wonder if they priced their home too low if they get a full priced offer the first day. They do not want to leave money on the table. In a strong market homes sell quickly and for full price, but it still makes sellers wonder if they listed the home too low. One the opposite end I have seen homes listed a $100,000 over market. Then the seller get two or three different offers from different buyers at $100,000 less (at market price) and still did not understand that they are over priced. Usually when a home is overpriced the seller will go through multiple real estate agents before they get the price down to the right market sales price. The seller believes the real estate is not doing their job, not marketing the home right when it is really all about the home being over priced. So they change realtors instead of lowering the price with the first real estate agent. Slowly but surely they lower the price or home values go up a little. So between lowering the price and market prices going up the house eventually sells. It does not matter if it is a lake home for sale in Oakland County or a home in a suburb of metro Detroit
Buyers will wait you out or move onto another home before they bid on an extremely over priced home
No amount of marketing will sell an over priced home. Buyers and the buyers real estate agent can tell that the house is over priced. One comment that comes from over priced sellers is " why won't the buyers put in an offer if the buyers like the house?" NO THEY WON'T Let's use this example. A Novi home is listed at $500,000. $50,000 over market price. So for a buyer to get the home at the realistic market price they would have to offer way lower. Normally the final sales price if half way between what you offer and what the list price is. So the buyer would have to offer $400,000 if the list price was $500,000 in order to get it at $450,000. The seller will reject the offer as way too low instead of countering it. If the buyer offered $440,000 the seller most likely is counter above list price. The buyer is not going to buy it. So in both examples it really boils down to....the seller not realizing they are over priced. Until the seller does, it becomes very hard to negotiate or to get the home sold.
When I meet with home sellers many times their idea of initial list price is much higher than the recent sold homes. Once in a while they sell at a higher price than the sold comparables, but many times the house sits and sits. Why do home seller's sometimes want to list so high? Sometimes it comes down to comparing their home to another home and thinking that their home is similar when it is not or sometimes it is just some number they thought of. Yes, I know it sounds crazy but I have seen it too many times over the years.
When you have a Metro Detroit home overpriced it boils down to getting that one buyer that wants the house. Every once in a while the over priced home does sell. I have seen it happen.
This home is not for sale just an example of the beautiful homes on the lake
On the opposite side what happens when the home is over priced. One of my examples is a home on Cedar Island Lake. It was on a small canal that was weed invested and you could barely get a pontoon or small boat out. You couldn't swim in the canal it was so nasty. It would take about 5 minutes or more to get out to the main lake. There was no view of anything nice when you looked at the canal. Yet the seller wanted to list the home at the same price as a home that sat on the lake, that had a sunset view, and that had a sandy beach. The difference in price in his home to the lakefront home was at least $50,000, but this home seller thought his canal front home that you couldn't even bring a speed boat to was worth every bit as much as a lakefront home. Luckily the seller chose another agent to waste their time with. Last I looked the home still sat on the market.
Do not chase the market down
So the question is "when do you lower the price on your home? It depends on the real estate market in your area. By having the realtor pull up homes that have sold in the last 30 to 60 days you can get an average of how fast homes are selling for? In a sellers market good homes go under 30 days for sure and many times in the first seven to fourteen days. So if you are in a seller's market you may have to drop your price quickly.
Usually when I go into a home and talk to the seller we talk about the realistic expectations on when they should get an offer. Let's it is spring and every house has sold in 7 to 10 days and they are getting $150 to $175 a square foot for a nice move in ready home. There will be sellers out there that will want to ask $200 a square foot for a fixer upper. That home is going to sit unless it has some features or an excellent lot. Remember the three items that affect a home sale are:
These are the 3 factors in pricing a lake house
- Location
- Condition
- Price
Come relax on the deck with us
So if your SE Michigan home is not selling something has to change. You cannot change the location, you can only change the condition or change the price. So you either have to improve the condition or lower the price. On the above example where homes were selling in 7 to 10 days, then if you did not sell in 10 days something is wrong. Either the price or the condition. Lowering the price is always the easiest and cheapest ways to go. However sometimes sellers refuse to do the simple things that will help sell the house quicker. So you should be looking at lowering the price if it has not sold in 7 to 10 days in a market that everything sold in 10 days or less. Or invest the time and money to improve the house. If all the homes on Chase Farms Subdivision Lake sold in 14 days and yours still has not...Then something is wrong...Especially if another one just came on the market after yours and sold already. Check out more home sales tips, search for SE Michigan homes for sale, and information on local lakes at http://www.oaklandcountylakefronthomesmi.com/
It's time to lower the price. I know it's hard to do, but you have to get the price to a point where buyers will put in an offer. You have to lower the price until you start getting plenty of showings or you receive an offer.
Russ Ravary your SE Michigan real estate agent
