One of the challenges real estate sellers in Australia make in selling their home in a for sale by owner deal is pricing the property correctly. The goal is to sell the house at the highest price, that’s just human nature. But, of course, pricing your listing too high comes with drawbacks. Hitting the sweet spot in pricing is a challenge involved in no agent property listings.
Ask anybody: do you want more cash for an item you’re selling or not? Of course they’re going to want the most return of investment. But keep in mind that when it comes to the real estate market, prices fluctuate plenty. Moreover, the estimated market value of a real estate asset will vary from one party to the next. And this includes professional real estate appraisers. Ask 10 appraisers to appraise your property and chances are great that you’ll get 10 varying values.
This is not to say that a professional appraisal means the value of your property is predetermined. Yet, between all 10 appraisals you receive, there will be a range of prices that are relatively close to one another. You shouldn’t expect any far off number. Despite this, plenty of sellers in homes for sale by owner listings tend to hike up the price of their home way too much.
Reasons that Keep Buyers from Simply Making an Offer
When people have the goal of ‘sell my house’ in a for sale by owner setup, there is a common trend to assume that buyers will simply make an offer. In cases when a buyer doesn’t provide the offer on a silver platter, plenty of sellers make the wrong assumption that price isn’t the issue. Said sellers think external factors are the root cause of the problem.
Wrong assumptions sellers make may include:
- They think that buyers don’t comprehend the inherent factors that provide more value to the property.
- The marketing strategy to reach more buyers isn’t effective.
One tip we’ve learned from real estate experience is that a major factor at play in unsuccessful listings involves something else. Remember, for a buyer to make an offer, they’ll have to see your house in person. No visit = no offer. The majority of buyers will only see properties that are within their budget.
For instance, if a buyer is searching for a house in a given neighbourhood, they’ll narrow down on a specific price range. If your property is overpriced, it won’t appear within the buyer’s radar. And even if your overpriced house does appear in the buyer’s line of sight, it will fall at the bottom of the priority list. Buyers will check out the most attractive homes in their list first, and price naturally pays a huge role.
The primary reason these buyers won’t simply provide you with an offer is because they won’t even hear about your home to begin with, thanks to the steep price tag you’ve attached to it. If home buyers never find out about your listing, forget about getting a visit from them. No visit = no sale!
Also, the typical buyer won’t visit a property with the hopes of providing a cheap offer and getting the seller to agree. A lot of buyers don’t want to lowball sellers. Buyers don’t want to come off as offensive.
Another reason why overpricing your home is a terrible idea is that buyers and their agents (if any are involved) may assume that an overpriced house involves dealing with a stubborn seller. Nobody wants to negotiate with unreasonable parties. Most people would rather ignore your listing than have to work on difficult negotiations.
When is Your Home Overpriced?
How does one know a property is overpriced? This will depend on the range of values in a specific location. As a rule of thumb, a house priced over 10% of the market value is overpriced (for homes around a million dollars or less). If your home is priced at 25% higher than the market value, good luck if you want to sell. Grab a rabbit’s foot, a dozen four-leaf clovers and cross all your fingers and toes.
Tip: Set your price at a range of 3% more or less the market value and you’re in the safe zone.
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