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Overpricing Your Home Will Cost You Money - and Here is the Proof (BLOG)

If you are a seller or soon will be, this is a MUST READ. This will change the way you think about pricing your home and what you think to be true!

I was recently given some Des Moines area statistics that proved a point that most agents try to convey to their sellers. This data makes the argument very clear about what happens when you price your home correctly, versus pricing it high and bring the price down over time (a fairly popular way to do things)

I believe this data should be the first thing a seller looks at during a listing presentation. The data is THAT VALUABLE!

Two sets of homes were compared for this analysis. Group 1 was homes that sold in the past 365 days that did not drop their price. In other words, somebody came and bought the home before the owners had a chance to do that. The owners "priced the home to sell."

Group two is the group of homes that sold in the past 365 days after having at least one price drop. These homes started higher on average than the homes in group 1, but did they sell for more???

The answer is NO! This is a huge point, so I will type it again. The homes priced lower to begin with, SOLD FOR MORE, than other homes that started higher and had to come down in price.

This is counter intuitive thinking, which tells you to start high to end up in a better place. The facts do not back that up. Here is a breakdown of what that looked like over the past 365 days.

Homes between $100,000 and $200,00:

No price reductions, original list price on average was $153,794 and those homes sold on average for 97.2% of list price, or $149,545. It took an average of 50 days to sell those homes.

One of more reductions, original list price of $163,297, those homes sold on average for only 91.1% of list price! Or, $148,685!

Now don't miss the key point here. The homes that were listed about $10,000 less than those listed higher and then reduced, sold for MORE MONEY! $149,545 vs. $148,685.

This is the proof that pricing a home higher got the owner nowhere. And to top that off, average days on market for the price reduced homes was 167!!! That is 117 more days than homes that were priced right to begin with.

This pattern holds true for all price ranges, not just this one.

The facts do not lie. Overpricing your home in hopes of getting more money for it, does you no good. You stand to make LESS, and spend a lot more time doing it!

I hope this changes a few opinions on pricing strategy if you are thinking about selling. Please pass this along to anyone you know who is thinking about selling their home. This is valuable information.

I owe a big thanks to Dylan DeBruin for compiling these statistics and sharing it with me.

If you have any questions or need any real estate help, please contact me. I would also appreciate your vote for "Best Ankeny Realtor" right here on Patch.com

You can learn much more about me at MarkCharter.com, including why I give away $5,000 to one one lucky client, after every 10th closing. You could be next!

 

Mark Charter

REMAX Real Estate Center

515-864-6444

Mark@MarkCharter.com

Licensed to sell real estate in Iowa

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Kurt B. August 10, 2012 at 01:17 PM
Another way to looking at this Mark : If I were to price my home at the valuation the assessor has on it, I'd never sell it - too high ( but..... thats what I am paying taxes based on ). If I were to price my home based on what I think it will bring, I will be right in the ballpark ( ~ 10% less than the assessors valuation ). So..... when are we going to lower property taxes based on the real-life valuations ? They need to go lower than that, but I will settle for the 10% for now. No wonder all the media articles talk about the high Iowa taxes - it's true.
Steven H. Eastman Jr. September 16, 2012 at 04:21 AM
Thanks Mark

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