Fischer: California dreamin’: An overpriced home usually sells for less
“What we need is just one of those rich California buyers to come in and pay cash,” says almost every potential seller of a Utah home. After all, many assume, previous residents of the nearly seceded state of California have likely sold their 1,300-square-foot shack sitting along the shores of the beach for several million dollars and would be more than happy to overpay for a property in our pretty great state of Utah. While cash-heavy Californians who desire a different climate, both politically and economically, have certainly arrived in Utah in droves the past few years, an overpriced home is not what any of them are generally looking for in this market.
This is just one of many reasons sellers give for wanting to list their home for more than it is worth. There are plenty of others as well. While all these reasons are common, they will not result in a sold home, even if your neighbor said it should sell quickly. Here are some facts about the neighbor (insert the word “friend,” “co-worker,” “mother-in-law,” “stylist” or “friend’s sister who does real estate in Nebraska” in place of “neighbor”): They are not a licensed, experienced Realtor who has been doing this business every day all day long for years. The neighbor is nice, well-meaning and wants to be polite and supportive. They also have a vested interest in your home being sold for a higher price because that means their home is also worth more. The fact, however, is that neither your home nor your neighbor’s home is worth more than it is actually worth, and an overpriced listing doesn’t sell.
Lest both you and the neighbor think everyone else is just giving their house away since the last home in the area sold quickly, rest assured, that is not the case. If a home sells quickly, it means it was priced at market value (correctly), it was likely clean, had a great floor plan, good curb appeal and was well-maintained in a great area.
Although you may not be in a hurry to sell, this does not mean overpricing and waiting for the “right buyer” to come along who finally sees the value is a good strategy. The “right buyer” probably did come along; however, since the home was overpriced, they passed. Buyers are privy to agent advice on values. Unless there are multiple offers (which only happen on homes priced right or below market value right now), it doesn’t matter how much they like the home; they are not going to overpay.
As a person who has a very difficult time staying still for any length of time, I get the need to wiggle. However, when it comes to pricing a home, leaving “wiggle room” for negotiations can be a self-fulfilling prophecy that will not benefit you. If the home is priced too high and it sits on the market longer, the more buyers will feel free to come in with lower offers, if they offer at all. There are too many that won’t bother even writing up an offer or becoming emotionally invested in a home that is overpriced. Buyers can’t read minds. Neither can their agents. They couldn’t possibly know that there is wiggle room in the set price. Safe to assume that everyone’s crystal ball is broken.
Historically, home values tend to rise over time. What they do not do, even in hot markets, is rise exponentially in the few days or weeks it takes to sell a home. Unless the plan is to market it at that price for the next few years, this is not a good reason to overprice a home.
Finally, rest assured that buyers’ agents are pointing out all the salient features of your home to their potential buyers. In the end, the choice is the buyer’s, not the agent’s. As a seller’s agent, we want the same thing you do; to sell your home for the highest price we can in this market. Ironically, that usually means it will sell quickly. A home sitting on the market longer generally sells for less than one that has been priced correctly in the first place and receives an offer quickly. If the home isn’t being shown, it is likely the price. A quick list price correction can fix that. After all, even wealthy California buyers value hard-earned cash.
Jen Fischer is an associate broker and Realtor. She can be reached at 801-645-2134 or email@example.com.