The median number of homes viewed by a buyer before purchasing a property was 12 in 2011. The number was similar in prior years: 2010 (15 homes), 2009 and 2008 (14 homes), and 2007 (15 homes). The majority of buyers found their home with the assistane of a real estate agent (80%), and fewer buyers found their home using a website (13%), For Sale Sign (4%), or an Open House (3%).
The primary factors that determine a value of a home include its location, size, age, condition, and the amenities. In practice, the market value of a home is mainly determined by the sales prices of other similar homes in your neighborhood that sold recently.
So why do so many sellers price their home too high? The obvious answer is that we would all like more money for our home, but our desire for more money could actually hurt our final sales price. In fact, overpricing a home is one of the biggest mistakes that sellers make. While it’s true that you can start with an asking price above market value, and then lower the price if the home does not sell, this approach usually ends up hurting the seller’s bottom line for these reasons.
First Few Weeks on Market is the Golden Sales Time. The first few weeks a home is on the market is the busiest period of time in which buyers will view the home. Homes that are priced above market value will miss out on the majority of buyers who viewed the home in the first few weeks, and then decided not to make an offer.
On-line Search Tools are Key. Most buyers begin their home search online by defining a price range. For example, a buyer may look for homes priced between $300,000 to $350,000. In this example, any home that is priced at $351,000 or higher will never be seen by these buyers.
Homes Can Get a Negative Reputation. Homes that have not sold after a few months can sometimes get a negative reputation amongst buyers and their agents. Buyers start to worry that there is something wrong with home, and real estate agents advise their buyers not to see the home because it is overpriced. Buyers at this point may also send in low offers (“low-ball offers”), believing that the seller may get desperate and accept an unusually low price.
An Overpriced Home Makes Your Neighbor’s Home More Attractive. When a buyer comes to see your home, they compare it to the other homes they have seen in that price range and neighborhood. If your home is priced correctly for the neighborhood, then your home should attract the majority of buyers interested in that area and price range. In contrast, if your home is priced substantially higher than other homes in the neighborhood, then this will discourage some buyers from coming to see your home, and encourage them to buy your neighbor’s reasonably-priced home.
In San Diego, a home that is priced correctly will normally sell at or near market value, in a reasonable amount of time, and with minimal hassles for the seller. In contrast, a home that is overpriced will usually remain on the market for a long period time, receive one or more “low-ball” offers, may get a negative reputation, and cause the seller many hassles. When a seller receives a good offer, they should accept it. Some sellers mistakenly believe that better offers will come if they wait, only to find out that the passage of time often produces lower priced offers.
Please contact me if you have any questions about pricing your San Diego home or condo for sale.