There's a great saying in the real estate business. If you want to sell your home, the price has to be within striking distance. If you have ever watched a rattle snake in action, you know all you need to know about striking distance and pricing your home. A rattle snake will lay patiently, waiting for their prey to come close enough to bite. They will only strike out when the animal is close enough to hit. You will never see a 3 foot long rattlesnake striking into thin air at an animal 6 feet away. That snake instinctively knows precisely how far it can reach out to strike it's prey and that prey has to be within inches of that distance before it will act. It will not waste it's effort on something that is not within it's striking distance! We can actually get a pretty good estimate of how far the snake can strike by measuring it's length and comparing it to our observations of striking history of similar sized snakes.
Potential buyers act in a similar fashion. They will not make an offer on your home if your price is not within striking distance. We can get a pretty good idea of striking distance by comparing your home to others in the marketplace. Just like the snake, the value of your home is pre-determined by nature. Nature determined the size of the snake and nature (or natural market forces) will determine the value of your home. No matter how badly the snake wants to eat, it will never reach something that is not within it's striking distance. Likewise, no matter how badly you want to sell your home, you will never get an offer unless the price is within striking distance of potential buyers.
When the typical seller sits down with a listing agent, it can be easy to get caught up in the excitement of choosing a high sales price. More money from the sale of their home means more financial opportunites. A higher selling price might mean they could afford a more expensive new home, help pay for their kid's education, take a vacation, save for retirement, or whatever else. Unfortunately, uninformed sellers often choose a listing agent who suggests the highest list price. It is the worst mistake a seller can make.
The truth is, it doesn't really matter how much money you think your home is worth. In fact it doesn't even matter what your agent or ten other agents think. The only person who's opinion really matters is the buyer who actually makes an offer. Pricing homes is part science and part art. It involves comparing similar properties, adjusting for the differences among them, tracking market movements, and following inventory levels, all in an attempt to formulate a range of value. In other words, it's all about making an educated guess. This is the same method an appraiser uses to value a home and no two appraisals are ever exactly the same, although they are generally close to one another. Put another way, there is no hard and fast price tag to slap on your home. It is only an educated guess and the market will dictate the selling price.
Homes sell at a price a buyer is willing to pay and a seller is willing to accept. If a home is priced too low, below others in the market, the seller should receive multiple offers to drive up the price to market value. So, there is little danger in pricing a home too low. The danger lies in pricing it too high and selecting a listing agent based solely on opinion of value.
Perhaps the largest blind spot for sellers is failing to take into consideration the time value of money and the effect of inflation. The time value of money concept simply means that having a dollar in hand right now is worth more than having a dollar in hand in the future. Inflation simply means that the purchasing power of a dollar right now will be less than a dollar in the future.
Let me give you a scenario. Let's say a seller has a home and two agents say it is worth $100,000 (as determined by a competitive market analysis). A third agent tells the seller he is confident he can get $105,000. Let us also assume that the rate of inflation is 5% per year. If the seller goes with the third agent and that agent gets the full $105,000 BUT it takes one year on the market to do so, did the seller actually make more money by using the third agent?
The answer is no. If we adjust for inflation, the seller got the same price. Additionally, they had to wait a year before they could get their money. The seller could have been using that money for the last year instead of waiting for it.
If you are considering trying to squeeze an extra two or thee percent out of the selling price, think about this: Trying to squeeze that little bit extra out of the sales price might be just enough to move you out of striking distance of the market. Just like the snake, you have to be quite close to striking distance for a buyer to act. Pricing your home just a few percent above prevailing market prices might be just enough to move you out of striking distance.
If a seller prices their home too high when the market is red hot, the market will eventually catch up to the asking price of the home and it will sell. However, when market prices are heading downward, if a home is not priced within striking distance on day one, the price will only grow further and further away from the striking distance as the days go by and there will never be a sale. That is why it is much more important to price your home correctly in a down market. Price a home too high when the market is going up and it just means that it will take a little longer to sell the home. Price a home too high when the market is going down and it will mean that the home will NEVER sell.
For the most part, your home "is what it is." Just like the aforementioned rattle snake can't make-over itself into a cute bunny rabbit, you can't make your home into something that it isn't. You have to work with what you have, which means the home itself and your available resources.
Is there something about your home that is scaring away buyers? This can be a very hard question to answer for a few reasons. First, you might be too close to the situation to see the problem. Often times seller's aren't even aware that there is something about their home that others find unappealing. After all, if they like their home, why wouldn't others? It can help to ask an unbiased third party for an honest answer. Just be prepared for the answer and don't take observations about your home personally.
Sometimes a seller knows there is a glaring issue with their home, but does not have the resources to address them. If a buyer does not have the resources to address an issue, they might still be able to partially address it, diminishing it's impact. For example, maybe outdated kitchen cabinets are turning buyers away. The seller might not have the resources to install new cabinets, but perhaps they can afford $50 worth of paint and supplies to paint them. There are usually creative ways to solve most problems that are within a sellers financial means. Sometimes they just need a creative third party to suggest the way.
Most of the items that scare off buyers cost little or nothing to address. There are two things that will scare off a buyer faster than any others: A dirty, cluttered house and a house that smells bad. A dirty house is obvious to most poeple, but clutter and bad smells can be very subjective. What one person sees as precious collectibles will likely be seen as clutter or junk by another. If you have "collectible" items ask yourself the following question: Would another person have a personal attachment to the item, and value it as highly? If the answer is no, then you probably want to put the item(s) in storage while you market your home.
Our sense of smell can evoke powerful emotions and memories. Ever smelled something and had it trigger a memory that happened 20 years ago? The scents and smells inside a home can trigger powerful emotions, both negative and positive. Why do you think some Realtors bake cookies at open houses? Some things, like the smell of warm apple pie, trigger positive feelings inside us (unless you had a bad apple pie experience). Other smells, like cigarette and pet odors will offend most people. If you are a pet owner or smoker, you might not be aware that your home has an odor to it. We simply get use to the smells we are around every day.
If you have pets or smoke, I would suggest that you assume that your home has an odor that non-smokers/non-pet owners will find offensive. Not to worry though. Getting rid of unpleasant smells isn't expensive, but it will involve some cleaning--from floor to ceiling. Nicotene and pet odors can permeate carpet and painted surfaces, so in rare cases you might have to paint or get rid of some carpet.
This is actually a pretty easy question to answer. The purpose of promotion is to create awareness of a product. If you had lots of people calling about your home and you showed it numerous times, it was probably promoted effectively. If that is the case, then look to the previously mentioned reasons as to why it did not sell. However, if you did not have buyers looking at your property, please read on.
After establishing a market price, an agent's most important job is to promot the product they are selling. Many agents are doomed from the beginning though, because they fail to properly define their product. For example: are you simply selling 2,000 square feet of living space, or are you selling a "lifestyle." If you are selling square footage, the only way to differentiate your home is by the price per foot. If you start off with an improper assumption about the definition of your product, off of your other marketing efforts, including promotion, will be misguided. Are you reaching potential buyers?
The overwhelming majority of buyers search for homes on the internet. If your home did not appear on the popular real estate sites, like Realtor.com, your odds of selling were greatly reduced. Were you using an agent from a nationally promoted company, like Century 21? Besides having a proven system for selling homes, Century 21 has a huge web presence.
Who is your target market?
Are most of your potential buyers first time home owners under the age of 30? Did you know that their preferred method of communication is text messaging? If you were not using text messaging to promote your home, you were not promoting it as effectively as you could have been.