Ready for another installment of my home selling tips of pricing your Michigan home and what to do if your home is not selling? Pricing your metro Detroit home is an art sometimes. You do not want to price it too low and leave money on the table. After all our goal is to get you top dollar for your home. At the same time you do not want to over price it either. Todays topic is about having to lower the price of your home and when you should do it if your home is not selling. I will touch on another alternative of improving the condition of the home versus lowering the price.
Home sellers and real estate agents walk a fine line of underpricing a home and overpricing the home. A seller will always wonder if they priced their home too low if they get a full priced offer the first day. They do not want to leave money on the table. In a strong market homes sell quickly and for full price, but it still makes sellers wonder if they listed the home too low. One the opposite end I have seen homes listed a $100,000 over market. Then the seller get two or three different offers from different buyers at $100,000 less (at market price) and still did not understand that they are over priced. Usually when a home is overpriced the seller will go through multiple real estate agents before they get the price down to the right market sales price. The seller believes the real estate agent is not doing their job, not marketing the home right when it is really all about the home being over priced. So they change realtors instead of lowering the price with the first real estate agent. Slowly but surely they lower the price or home values go up a little. So between lowering the price and market prices going up the house eventually sells.
No amount of marketing will sell an over priced home. Buyers and the buyers real estate agent can tell that the house is over priced. One comment that comes from over priced sellers is ” why won’t the buyers put in an offer if the buyers like the house?” NO THEY WON’T Let’s use this example. A Novi home is listed at $500,000. $50,000 over market price. So for a buyer to get the home at the realistic market price they would have to offer way lower. Normally the final sales price if half way between what you offer and what the list price is. So the buyer would have to offer $400,000 if the list price was $500,000 in order to get it at $450,000. The seller will reject the offer as way too low instead of countering it. If the buyer offered $440,000 the seller most likely is going to counter above list price. The buyer is not going to buy it. So in both examples it really boils down to….the seller not realizing they are over priced. Until the seller does, it becomes very hard to negotiate or to get the home sold.
When I meet with home sellers sometimes their idea of initial list price is much higher than the recent sold homes. Once in a while they sell at a higher price than the sold comparables, but many times the house sits and sits. Why do home seller’s sometimes want to list so high? Sometimes it comes down to comparing their home to another home and thinking that their home is similar when it is not or sometimes it is just some number they thought of. Yes, I know it sounds crazy but I have seen it too many times over the years.
When you have a Metro Detroit home overpriced it boils down to getting that one buyer that wants the house. Every once in a while the over priced home does sell. I have seen it happen.
On the opposite side what happens when the home is over priced. One of my examples is a home on a lake. It was on a small canal that was weed invested and you could barely get a pontoon or small boat out. You couldn’t swim in the canal it was so nasty. It would take about 5 minutes or more to get out to the main lake. There was no view of anything nice when you looked at the canal. Yet the seller wanted to list the home at the same price as a home that sat on the lake, that had a sunset view, and that had a sandy beach. The difference in price in his home to the lakefront home was at least $50,000, but this home seller thought his canal front home that you couldn’t even bring a speed boat to was worth every bit as much as a lakefront home. Luckily the seller chose another agent to waste their time with. Last I looked the home still sat on the market.
So the question is “when do you lower the price on your home? It depends on the real estate market in your area. By having the realtor pull up homes that have sold in the last 30 to 60 days you can get an average of how fast homes are selling for? In a sellers market good homes go under 30 days for sure and many times in the first seven to fourteen days. So if you are in a seller’s market you may have to drop your price quickly.
Usually when I go into a home and talk to the seller we talk about the realistic expectations on when they should get an offer. Let’s say it is spring and every house has sold in 7 to 10 days and they are getting $150 to $175 a square foot for a nice move in ready home. There will be sellers out there that will want to ask $200 a square foot for a fixer upper. That home is going to sit unless it has some features or an excellent lot. Remember the three items that affect a home sale are:
So if your SE Michigan home is not selling something has to change. You cannot change the location, you can only change the condition or change the price. So you either have to improve the condition or lower the price. On the above example where homes were selling in 7 to 10 days, then if you did not sell in 10 days something is wrong. Either the price or the condition. Lowering the price is not always the easiest and cheapest ways to go. However sometimes sellers refuse to do the simple things that will help sell the house quicker. So you should be looking at lowering the price if it has not sold in 7 to 10 days in a market that everything sold in 10 days or less. Or invest the time and money to improve the house. If all the homes on Chase Farms Subdivision sold in 14 days and yours still has not…Then something is wrong…Especially if another one just came on the market after yours and sold already.
It’s time to lower the price. I know it’s hard to do, but you have to get the price to a point where buyers will put in an offer. You have to lower the price until you start getting plenty of showings or you receive an offer.
If you could use a good realtor that will work with you, one that will tell you what your house should be priced at, but not dictate to you what you have to do. After all it is all about you feeling comfortable in the home selling process. It’s about your house, your money, and what you want. If you want to hire a real estate agent that has the selling experience in the Metro Detroit suburbs, local real estate, and recent sold home prices in your community give me a call. I love helping home owners sell their homes!
What my clients had to say about me.
What one of my clients had to say about me
The service provided to us by our realtor Russ Ravary was simply outstanding. Not only did Russ help us find our dream home for a great price, but he also sold our house for top dollar in less than three days! The professionalism, flexibility, & overall quality of service provided by Russ far exceeded every expectation we had. If you want a realtor that truly cares about the customer, operates with integrity, & will work diligently to ensure all of your needs are meant then we strongly recommend you contact Russ. After closing he even gave us a kayak to use on our new lake! Thank you for making our dream come true!