Price my home higher to leave room to negotiate
Did you know that a vast majority of homeowners believe that this is the way to sell a home? – the best tactic.
Let’s take a look at Rebecca and Brad who were ready to list their home for sale. They knew they wanted to sell their home for $825,000 so they decided that it’s best to pad the price a little bit to give them a little cushion. They’ll add another $30,000 onto $825,000 and list their home on the market, day one, at $855,000. They assumed all Buyers try to lowball a home Seller, so this way, they’ll be one step ahead of any prospective home Buyer they both think. They’re so astute!
How did this play out for Rebecca and Brad? Well, weeks passed and no bites on their home. They were forced to reduce their home’s price by week four, but they still wanted to keep some wiggle room. They dropped the price to $838,000 and by six weeks on the market, with no interested Buyers they reduced to the $825,000 – which should have been the initial list price. And they finally sold their home for $818,000.
How does this strategy fail?
You want the most money for your home, right? Pricing your home higher than its true value, means you can miss out on being seen by the well-qualified home Buyer within your home’s true price range. Buyers who are looking at homes priced at $825,000 won’t even see your home priced $30,000 above its true value, because they’re approved to buy a home for $825,000 and are viewing homes priced up to $825,000.
And, Buyers who are qualified to buy a home at $855,000 are going to be interested in homes listed for sale that are larger and have more desired upgrades than your home, priced to leave room for negotiation. Why would they pay $855,000 for your home when they could buy a home for $855,000 that has more square footage, and updated Kitchen, plus other updates?
The last resulting effect of this strategy is that after a home is on the market for so long, it can often taint your home’s image. Buyers wonder why your home was on the market for so long and will want to pay less for your home.
If a home is selling in a Seller’s market, a home priced right can also incite a selling frenzy when interested Buyers will often offer a home Seller more for their home so they don’t lose the home when inventory is low and Buyer’s are competing tooth and nail when homes come new to the market. Even when not a Seller’s market, a well priced home sells, compared to a home that is priced too high
Not divulging all that is known about my home
As a single dad, Duke needed every last penny to care for himself and his two young children. Times were tough as a dad caring for his children. He was taking a new career opportunity that was out of state and had to sell his home for the most money. The mold and termite issues he discovered last month will just be his little secret. Oh he felt bad in not revealing, but how much can it really hurt?
Unfortunately, putting this strategy into action with the first Buyer, Duke found out the hard way what the Buyer thought of the surprise find.
How does this strategy fail?
Is not divulging, a little white lie or a full fledge lie? Keeping defects from any prospective Buyer that can affect your home’s value will likely be revealed upon the Buyer’s home inspection anyway, which is then just ammunition for a price reduction request. Don’t give a Buyer the chance to further reduce the price that they’ll pay for your home. Believe me…Buyer’s love to request all kinds of credits and price reductions after a home inspection. And the reduction they request is seemingly always more than what it could have been had they had knowledge of the defect prior to presenting their offer. This way, you’ll know and they’ll know the list price reflects the known defects – allowing you to save more money than waiting for an inspection discovery that will end up costing you more.
Let’s say the home inspector didn’t catch the termites and the Buyer goes ahead and purchases your home only to later discover termites. They won’t be happy and if it shows that they’ve been there a long time, the Buyers may feel you hid it from them. Do you think they’d have any problem in contacting an Attorney to see their recourse? You don’t want to mess with that horror, I’m sure. This strategy will net you less money. Confess up, ahead of time.
Laws can vary by state, yet typically you need to disclose anything about your home that will affect it’s value.
Not a strategy that’s ever recommended. It’s always important to divulge all that you know about your have even if you think it means you’ll receive less for the sale of your home.