1. Selecting an agent based on price
Keep selecting an agent and choosing a listing price separate, so many times I'll tell a seller, Select your agent first and then you and that agent work together to come up with a listing price because the problem is too many times agents will come in, and they will give you a price that they think you want to hear versus what you need to hear because that's a way to get the listing.
2. Selecting your price based on an online estimate
There is no online estimate tool out there that's going to be accurate. An agent needs to physically look at your home to give you an accurate price. Many of the big websites that have online home evaluation tools, they're selling those leads to agents. Agents have tools like that. They're just trying to get your information, but quite honestly, none of them are accurate. Many people like to look at Zillow’s Zestimate. When the CEO of Zillow sold his home, the Zestimate was 1.7 million and he sold it for 1.1 million. The Zestimate for the CEO of Zillow was off 35%! Does that tell you anything?
3. Basing your price on your assessed value or how much the insurance agent has it insured for
Years ago, most of the time the assessed value was lower than what you could sell your home for. Now, a lot of times we're seeing it's higher than what you could sell your home for. In general, don't listen to the assessed value prices or what your insurance agent says its worth because again they haven't been in your home. You must have a physical inspection of your home to come up with an accurate price.
4. Basing your price on an appraisal completed for any reason other than for selling your home
Many times, appraisals completed for refinance or home equity lines can be higher than what you can actually sell your home for. If you want to pay an appraiser, the only appraisal that is accurate, is one completed for the purpose of selling your home.
5. Couldn't we just try at a higher price for the first couple of weeks?
Most buyers are online and every day they're searching out the new listings. When your home first goes on the market, most of your activity comes early on and then it slows down a bit over time, so you don't want to price your home high in the time you're getting the most activity. I tell people it's like a retailer marking your prices down a week after Black Friday. It doesn't make sense. You need to have your home priced right at the start.
6. We can always come down
Most if not all buyers will ask: “How long has this home been on the market?" If you overprice your home at the start, you probably will have to lower the price at a later date. Then, your days on market is extended. You can only create that demand for your home early on. Once your home is on the market for a long time, it's hard to sell at any price.
7. Buyers can always make an offer
They can. Only if they see your house though. Let's say you have a buyer looking to buy a home up to $200,000. They will probably search up to $205,000 or $210,000, maybe even $215,000 tops. If you build in too much bargaining room and price your home at $220,000, many of your most qualified buyers will not even see your home because you priced it higher than they are looking.
8. We want to build in bargaining room
Again, if we have a house that's worth $200,000, we're going to recommend a listing price no more than $204,900. If two homes are worth $200,000, which house will get more showings… the one priced at $204,900 that does not have much bargaining room or the house at $219,900 that built in more bargaining room? You need to build in some bargaining room, but not much.
9. We paid more than that
What you paid for a property has nothing to do with its value today. You can ask people in Florida, California, Arizona or Vegas over the last several years where their values dropped 50%. Does what you pay for a stock have anything to do with its future value? What about if you inherit a property and you paid $0. You would still want market value if you sold the property… wouldn’t you?