Judith Sutton ABR CRS IDS PMN ASP IAHSP SRES GREEN
Judy@JudithSutton.com 908 803-0472
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What to consider when Overpricing your Home
How has the market reacted so far, this year?
Limited inventory has been an issue for some time. Which is the reason homes have skyrocketed in the Somerset Hills and surrounding areas. The availability of homes to purchase is not keeping up with the growing demand of the new homebuyers entering the market, added to those who have been searching for a year or two.
It only takes two buyers to start competitive bidding and we have seen more than thirty bids offered on a single home which in turn takes the final sales price soaring. In addition, anxious buyers are eliminating contingencies and accepting the home “as is.” Some of these waived contingencies include appraisals, limited inspections (other than mechanical, environmental, and structural), coupled with offering all-cash offers which take away the mortgage contingency.
This all leads to an extremely good market for sellers, having homes sell for well over asking price.
All of this can lead to over-aggressive sellers, causing them to over-price their property instead of letting the market test the price. These are the homes that are viewed, but no bid has been offered causing a seller to have a price reduction which almost always leads to the home selling for less than it would have sold had there been a less aggressive price bringing several buyers competing and which would offer the most favorable price and terms for the seller.
In this scenario, a home might sit without offers forcing homeowners to drop their price. Buyers become suspicious about the overall desirability of the home. As a seller, aligning your home with comparable sales in your area is important because an appraiser must identify its value for the mortgage company for any buyer not paying cash.
When a well-priced home has received several offers and receives a price over asking, buyers have been seen to be more willing to waive the appraisal if they have the cash to make up the difference.
Also, in addition, appraisers are very familiar with the ever-increasing prices in their area and generally allow for the appropriate number to make the home appraise.
Another area where sellers make a mistake in overpricing is when listing their home based on what they want to make from the sale and not considering realistically what the comparatives show in terms of size, location and most importantly, condition.
What a seller wants or needs is not necessarily what the seller will get.
Pricing the home too high on purpose can be a problem. The thought is the seller will have room to negotiate down, however, if it is too high it can deter potential buyers from even considering the home. Consider this: If the home is overpriced it will then have to have a price adjustment, losing the peak period of activity that a new, fresh listing enjoys.
Limited inventory with an overflow of buyers will bring the market price to where it will sell. Knowing the pros and cons, advantages and disadvantages of a sales price being competitive, will make a seller confident and smart.
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Judy@JudithSutton.com
COLDWELL BANKER...GUIDING PEOPLE HOME SINCE 1906
908 803-0472
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