There’s one piece of advice that every real estate agent on earth will tell you – “If you overprice your home, it will take longer to sell and sell for less money.”
Yet, sellers ignore them, and overprice their homes anyway, hoping their home will be the one to defy market physics. Why do they do it? Lots of reasons:
They feel entitled to make a profit
They don’t want to bring money to closing
They feel their home is superior to other similar homes
They want a return on improvements and repairs
They want to buy a bigger, more expensive home
They want to pay off credit card and student loan debts
They want to pay for college, retirement or some other financial goal
They think buyers want to negotiate
They think real estate agents can get it sold for more if they just work harder
Did you notice that not a single one of those reasons has anything to do with the current market value of the home?
According to an older study from real estate community Zillow.com, sellers often base their asking prices on their original purchase price. In other words, they want to live in the home for a number of years, and then sell it for more than they paid for it so they can meet personal financial goals, such as buying a bigger home or putting more toward retirement.
That’s understandable, considering that typically, homes beat inflation by one or two points, but the market doesn’t always cooperate. Buyers may not like the improvements you made to your home. Your home may have been in a trendy neighborhood when you purchased it, but now buyers are flocking somewhere else.
If you overprice, your home is going to stagnate on the market. The right buyer for your home might not know your home exists if they use price perimeters to search for a home. That means a typical search between $175,000 and $200,000 won’t include your home priced at $205,000.
Buyers tend to search in increments depending on scale – $10,000 increments for $100,000 homes and $100,000 increments for million-dollar homes. Pricing just over a logical range end point like at $255,000 or $505,000 will exclude that home from some search results, say experts.
Setting a high price with wiggle room to reduce the price later is not a successful strategy. You might get some showings, but you won’t get offers. Your home could sit without an offer for a month or two before you take action to reduce the price. Once you reduce the price, buyers tend to think there’s something wrong with the house, sending potential offers even lower.
Instead, price your home just under break points. $249,000 instead of $255,000. Since you’re already expecting to negotiate, a lower price point might get you a full-price offer from a buyer who recognizes that your home is a good buy.
Author: Blanche Evans
Why Use AMPI?
AMPI is the national association of real estate professionals that have, since 1956, gathered under laws and codes of ethics and conduct to create a reliable, trustworthy an efficient real estate environment in Mexico.
AMPI consists of separate autonomous sections all throughout the nation, as well as more than 4,000 associates and affiliates.
Each section is independent and has its own board of directors, only surpassed by a national board of directors comprised of twenty associates from all over the republic.
Developed over the years with the
input and knowledge of its members, AMPI is much more than just a collection of offices.
AMPI has been a solid and recognized institution in Mexico for the past 27 years. It was originally established in 1956 and was consolidated in 1980.
AMPI is currently represented in all the principle cities and regions of Mexico stretching from Tijuana to Cancun.
The Riviera Nayarita, Vallarta and Compostela chapters of AMPI are dedicated to promote the best practices in real estate by providing its members with education to reinforce the standards of ethics that give our industry the credibility which our clients deserve.
AMPI is committed to giving our membership access to a multiple listing service that forms the platform from which our industry can expand locally and into other markets while giving our members precise and up to date information that is vital to continuous improvement and growth.