We’ve discussed overpricing on this blog several times and how it actually does more harm than good. Many home sellers hold onto the notion that the best approach is to price high originally and then negotiate the number down to their ideal sales price.
We maintain: This is not the best approach.
According to FMLS figures, in April, Metro Atlanta home sellers asked for an original median price of $298,500 and actually received 14.9% less, for a median sales price of $255,000. Take a look at the disparity between original asking price vs. sales price, by county, below.
Let’s put this in perspective …
The Knock team relies pretty heavily on data to tell stories, but this week, we decided to employ a real-life example to illustrate why overpricing a property is not the best approach.
Back in March, a seller we’ll refer to as “Jake” approached Knock as his home had already been on the market for three months. He initially listed it in December 2016 with a traditional realtor for $435,000.
By the time he reached out to Knock, the listing had already undergone two price reductions. It stood at $415,000.
Knock was happy to step in, and guaranteed the seller a price of $400,000. However, he still had hope that his house would sell for more than $415,000, so he declined the offer from Knock. No hard feelings. We wished Jake well as he continued to list with his realtor.
Let’s fast forward. It’s now May, and this listing is still on the market. The seller has dropped the price three additional times, and the house is now listed for $394,900 — less than the original offer Knock made back in March.
Because the seller is still waiting to accept an offer, this property won’t actually close for at least another 45+ days. When you factor in mortgage payments, utilities and the overall stress, the cost of overpricing turns out to be pretty high.
There’s a strong correlation between the time a house spends on the market and overpricing. If a property receives zero offers within 30 days of being listed, it is priced way too high. And once a house is on the market for more than 30 days, buyers will undoubtedly tell themselves, “There must be something wrong with this place.”
Separate the price from the emotion
We get it: Selling a properties is one of the most emotional transactions a person will make in their lifetime. Homeowners put a lot of time and effort into their properties, and sometimes, that emotional attachment skews their view when it is time to sell. They tend to overprice their houses in a way that does not align with buyers’ expectations. To learn how Knock can help you get your property’s price right the first time, read up on our strategy.