When getting ready to list your house for sale, some sellers have a hard time hearing what their house will likely sell for, believing that it’s worth more than it actually is. This is understandable, since many people can’t see the flaws in their house and may have an unrealistic idea about what it will actually bring. Sellers sometimes ask if we can “test the waters” by intentionally listing their property with a price that is too high for the current market.
We get it: It might seem like this is a good idea because you can always lower the price if needed. But there is evidence that ultimately this strategy backfires, leading to a final sale price below the price the house would have brought had it been priced right to begin with.
Dangers of pricing too high
If you put a house on the market and you price it too high, what happens? It just sits there. As the days tick by, everyone who looks at your listing can see what the house listed for originally, how long it has been on the market, and what changes have been made to the listing price. If a house has been on the market for 60 days when the average time on market is 14 days or less, a potential buyer may think there is something wrong with the home. This feeling can persist even if they see the house for themselves and it could work for them. We call this the “stale bread effect.” If it’s been on the shelf too long, they don’t want it. Better to look for a fresh loaf.
When the listing price gets lowered, it often reduces the final sale price
Lowering the price of a house when it doesn’t get offers in a reasonable amount of time really adds to the impression that there might be something wrong with the house. And then once offers start coming in, they will likely be lower and there could actually be downward bidding which is the opposite of what you want as a seller.
Price it right to get the highest sale price
In our experience the best strategy is to list your house a little bit under its fair market price. If done right, especially in a tight market like Denver’s, this makes the house very attractive to buyers and often leads to a bidding war. When that happens, the result is often that the final price is over the asking price, sometimes by a significant amount.
Clearly the most important part of this process is gauging what the actual value of a property is in the current market, not just the number listed on a website somewhere. Paul has decades of experience in getting this number just right in a variety or market conditions. For example, over the last two years the median days-on-market for our listings was just two days. As your listing agent, Paul will give you an honest assessment of the fair market price of you home, because he knows that getting the price right is critical to getting the most for your home.