In this blog post, we’ll be discussing about the importance of pricing your home correctly from the beginning so you DO NOT shoot your property sale in the foot. This might sound a little harsh…
There’s a good chance your home is not worth what you think it is. Don’t get mad because you don’t create the value of your home, the recent home sale prices do!
Your real estate agent does not create the sales price of your Chicago home either, (I so badly wish I could) so don’t get mad at them if they tell you it’s worth less than you wanted. It’s totally normal to think your home is worth more than it really is, but nine times out of ten, it’s not. One of the first things to do before listing your house for sale is to rid yourself all emotional attachments, and get ready to treat this as a business decision.
Forget all the fun times and memories you had in your Chicago home because if you do and follow the advice I’m going to outline for you in this post, you’ll have an easier transaction that will NET you a higher sales price.
For the record, I too think my house is worth more than it is. I have an emotional attachment to it, but the day I sell it, I will block all emotional attachments out. My job is to give you the low down dirty truth. If I told all my clients what they wanted to hear, I would have been out of business 5 years ago. You or I do not create the market, recent home sale prices do.
Sell It Fast & For More Money
You may have heard that there’s not much housing inventory in Chicago right now, which means that prices for homes have gone up across the board. This is great news for you as a home seller!
Real estate is simple when you think about it. The more demand, the higher the price. The less demand, the lower the price. However, that does not mean you or I get determine what we sell it for because regardless of market conditions, the vast majority of buyers are going to make an offer based on recent home sale prices, not what you or I say it’s worth.
Yes, once in a while with a great marketing plan, buyers might be willing to overpay for a house they fall in love with, but over 90% of the time, they will base their buying decision off recent home sale prices.
The homes that sit on the market for months with no showings is mostly because because they were priced too high from the start. Accumulating a lot of market time is not a good thing because it taints the property.
What’s Tainting Mean?
When you try to list your house for more than recent home sales prices reflect it’s worth, nine times out of ten you do more harm than good. Remember how important first impressions are? The first impression a buyer gets about a home that has been listed for a long time in any market is this:
“Something must be wrong with that home.”
“If nobody else bought it it’s not worth what they are asking”
“Recent home sale prices are … This home has been on the market a while so let’s low ball them”
When I work with buyers, part of my strategy is to find properties with lots of market time, because I know there is negotiation room and not much interest in that house. That’s when I advise my clients to come in low so they can get a much better deal. I’m advising you right now to not be on that side of the deal.
The higher you list your property from what it’s truly worth, the less potential buyers out there. Take a look at the image below to see what I mean.
Price And Visibility
As you move farther up the Pricing Pyramid, there are less buyers who are willing to buy your home. In order to maximize exposure, we recommend pricing your property at or slightly below market value to create urgency. When a new listing hits the market, everyone will take notice of it. Your best chance of selling your home for top dollar are the first two weeks it’s listed. It’s essential that you “position” your property most attractively during this time.
Doing this is more likely to create a multiple offer scenario or a buyer willing to come closer to list price because they will know you have lots of interest being newly listed. This is how you play the game. It is our job to maximize your exposure and create the urgency for your home. I want every showing to think your home is going to be sold today.
When you get multiple offers on your Chicago property, you WIN. We like winning! Still not convinced? Let’s go through a hypothetical example to drive home the strategy.
DJ and Jill lived in Roscoe Village and contacted us to list their beautiful 2 bed condo. They recently found out they were expecting their first child, so it was time to find a home with new space.
I met with them to discuss the options of putting the condo on the market and towards the end of our conversation, the pricing discussion begins.
They paid $335,000 for their home 7 years ago. Based upon recent home sale prices, their house was worth was $345,000-$355,000. The couple was taken back by what their home was truly worth as they were expecting $375,000-$400,000. I thought they were going to throw me out the window when I told them what their home would trade for today, but I wasn’t going to lie to them just to get their listing.
Buyers second guess a property’s value as more market time accumulates. What’s worse is so does their agent.
We don’t create the market, recent home sale prices do!
We explained how the first two weeks of any listing is critical because this is when the most amount of eyeballs will be on their listing!
Undeterred, they felt there home was worth more than it was and that someone out there was willing to pay above market value. So we list the house at $385,000 after many warnings of the risk associated.
A big fat ZERO showings in the first two weeks we hit the market. We eventually drop price 3.5 weeks later to $369,900 and then again 30 days after to $349,900. By this time we have accumulated too much market time and even though we are at its current value we lost our sizzle. They were hoping to get out of their house before winter, but that didn’t happen.
I then advised the couple to take the property off the market for a few weeks to let it breathe a little bit so we can reposition it again for sale, but it at a price that would sell.
Once we took the listing live for the second time, we got into a multiple offer situation and settled at $352,500 6 days later in the middle of a winter market which typically is not the best time to sell in Chicago.
The key to selling your property today, is to position it properly so that you make the largest possible splash once you go live on the market. The key to selling your house is how you position it as any good marketer will tell you, “people will pay more for something they fear may be gone tomorrow”. A Realtor’s job today is to create a level of exposure and interest that creates urgency for your home that potential buyers feel like they will never be the same without owning it. (Make sure you hire a marketer that does more than list a house in the MLS and pop a sign in the yard. You want a real online marketing plan!)
I hope that this post helped you understand the importance of pricing your home correctly by basing your list price on recent home sale prices and not what you wish for!
What you think? You have any questions for me? Please let me know if you do and give me a ring.