The real estate market of 2022 continues to favor sellers. There are simply more buyers in the market than there are homes for sale. While this isn’t necessarily great news for buyers, it can certainly make most sellers feel more confident. But it’s vitally important not to let this information give you a false sense of security – especially when it comes to price. Even when multiple buyers may end up competing to buy your home, you should still price your home correctly from the start. Here’s why it matters so much.
Dangers of overpricing
You’ve no doubt heard how housing prices have skyrocketed in the last two years. The pandemic has upended the real estate market. Record-low interest rates have fueled demand, yet sellers have been hesitant to list. As a result, home prices continue to increase. According to the National Association of Realtors, home prices rose 16.9 percent from 2020 to 2021. As a seller, don’t let this news fool you into pricing your home sky high. There are several dangers to overpricing your home including:
- Your home sitting on the market for too long. When your home is priced more than comparable homes in your area, this can be a red flag to buyers. Your home could end up sitting on the market for much longer than needed.
- Deterring would-be buyers. Today’s homebuyers are savvy and will know when your home is priced well above the competition. This will be off-putting, thus reducing the number of interested buyers.
- Sending buyers the wrong message. Pricing your home too high at the beginning may lead to price drops along the way. When buyers see the listing price has been reduced, they may think that something is wrong with the home.
- Losing the deal when the appraisal comes in lower. If your buyers are financing the purchase of the home, then their lender will perform an appraisal. If they determine the home is worth less than the asking price, then it could jeopardize the sale.
Dangers of underpricing
While overpricing is more likely to happen in today’s market, there is still a possibility of pricing your home too low. The dangers of underpricing include:
- Causing worry among buyers. Today’s buyers are expecting home prices to be higher than they have been. When they see your home is priced below others in your area, they may worry there are expensive problems that will need to be addressed after closing.
- Leaving money on the table. While underpricing a home could lead to a bidding war, you’re more likely to end up leaving money on the table. If you want to maximize your profit, then you need to price correctly.
How to find your “Goldilocks” price
When you work with a trusted real estate professional, they will use their expertise and knowledge of the local market to help determine the appropriate listing price. This will help to ensure you sell quickly, have fewer contingencies to deal with, pay fewer out-of-pocket expenses, and make the best profit. If you’re interested in knowing the value of your home, then contact us today!