You take the time to prepare your home and list your property. The family is ready to show at a moment’s notice. You are just waiting for the offers to roll in after the first open house. No offers, then a week passes, a month passes, then 2 months…. Showings are almost non-existent. The confidence you had to begin with turns to doubt, now you are wondering how do I know if my home is overpriced. The problem now is you need to make some decisions and quick. You don’t want your home to become stagnant in your local real estate marketplace.
Learn to spot the signs that you may have overpriced your home.
1-YOU IGNORED THE PRICING OF COMPARABLE PROPERTIES
If you listed your home with any decent agent they would have gone overpricing of similar homes in your neighbourhood that have sold recently in a Comparative Market Analysis. Did you follow your agent’s recommendation of pricing? Often sellers get emotional about their home and want to ignore the data. Go back and look at the CMA what were comparable homes selling for?
2- LACK OF APPOINTMENTS
It is important to sell your home in the first 20-30 days on the market. You should have an influx of showings in the first several weeks. Your busiest weeks will typically be the first 3 or four weeks. After that showings will dwindle down to almost nothing. Have you listed your home and have had no showings or very few? It is only going to get worse. If you start off with very few showings and have gone weeks with no showing that is a telltale sign your home is probably overpriced.
3- NEIGHBOURING HOMES ARE SELLING BUT YOURS IS NOT
Your real estate agent should be giving regular market updates. Are many of the homes that were for sale when yours was listed now sold or under agreement but yours is not? If your neighbours are getting their houses sold but you are not, is time to go back an review the pricing of your home.
4- THE FEEDBACK INDICATES YOU ARE OVERPRICED
Hopefully, you are receiving feedback on a large number of your showings. Feedback is a great tool once you are listed. There are two things to look at in the feedback. One, buyers and agents may flat out indicate the property is overpriced. Or two, the buyers are ultra critical of your home. They may not say the home is overpriced but they ‘nitpick’ it to death. Remember one or two comments is not a reason to go off the deep end, but if you keep hearing the same thing over and over it may be time to do something about it.
5- NO OFFERS
You may be getting showings but no offers. My general rule of thumb for homes on the market is 12-15 showings and you should be receiving offers. If you start hitting 20 showings and you have not received an offer it is time to re-look at your pricing strategy.
6- LOW ONLINE ACTIVITY
Your real estate agent can track online views of your home. If your home is not receiving the views online it will follow thru to lack of showings as well. Your home is showing up in the home searches but buyers are rejecting it before they even view it online. Most likely the stats of your home don’t hold up to your competition.
7- YOU LET YOUR AGENT ‘BUY YOUR LISTING’
Did you hire your agent solely based on the fact they gave you a higher listing price than everyone else? There is a name for that in real estate jargon is called buying a listing. An agent will play on your emotions and give you an inflated list price. Of course, you are willing to believe it they are the professional. But, in doing so you probably did not pay attention to all the details like the agents marketing plan or make them back up their pricing with solid market data. Was your sole decision for hiring your agent based on the fact they gave you the highest list price?
8- DID YOU PRICE YOUR HOME BASED ON COSTLY RENOVATIONS?
Often a home seller will choose to price their home because of costly renovations that were done for their personal taste and not what would be considered the norms for their price range. A gourmet kitchen in a starter home with upscale commercial appliances is a perfect example. Or money spent on that braai pit or spa that you like but is just not everyone’s taste. If you purposely raise your price due to costly renovations you did for your personal tastes then your house will sit overpriced among its competition.
9- IF YOUR HOME EXPIRED ON THE MARKET UNSOLD
Your listing contract is up and your home hasn’t sold. At this point, you have missed all the signs your home is overpriced, now its time to get realistically. Don’t let your home languish on the market unsold.
YOUR HOME IS COMPETING WITH OTHER HOMES
When sellers insist on overpricing their home they usually fail to see that their home is competing with other homes. Often when a buyer views your home and ‘rejects’ your home they move on to buy another home that they found more compelling.
First, you must remember buyers are choosing the homes they personally view online. Your homes photos and statistics must stand up to the other similar home they are viewing online. And, it certainly must carry through to the showing as well.
A house that is compelling at R3 500 000 amongst its competition will certainly not be compelling at R4 500 000. First, it will look way overpriced alongside its true competition in the R3 500 000 price range. Secondly, it will not ‘hold muster’ to the homes priced properly at R4 500 000.
THE GOOD NEWS
The good news is if you did overprice your home, you can usually overcome it quickly. The key in overpricing your home is realizing you may have overpriced your home and react quickly. If you are able to react quickly there is probably no damage that has been done in the marketing of your home.
The worst thing you can do is let your home sit on the market for 90, 120, 180 days without a change. The internet has sped up the real estate market. In most cases, your home should be sold within 60 days.
Work with your agent to get the data you need to make the right decisions regarding the pricing of your home. One last thought. It is almost impossible to underprice a home in this day and age. If your home is worth more and you give it a little bit of market time it will correct itself.
If you are thinking of selling there will be no more important decision than the agent you choose to manage the marketing process of your house. You need a straight-talking enthusiastic professional who will explain what strategies will be used to protect your property value.
Edited for South African readers and the South African property market by Andre de Villiers from an original article on Merrimack Valley Estates