Overpricing Your Home Will Cost You the Sale and Lost Value
June 25th, 2007 categories: San Diego Real Estate, Selling San Diego Real Estate
One of the serious consequences of over pricing your home is that it will sit unsold on the market. It becomes shop worn and then it simply languishes on the market until it expires.
When you re-list the property, the market conditions have usually changed and not only is a serious price adjustment going to become evident, when it does finally sell it will be for so much less that it might have been when it was first introduced to the market
How did it get to market so overpriced in the first place?. If the agent takes the over priced listing with the hope that in time the seller will become more realistic over time, both the seller and the agent are going to have wasted a lot of time and some valuable resources.
A good rule of thumb is that if a property has been marketed correctly ( maximum exposure )and a you get ample showings with no offers, then it is flat out overpriced for the current market. It should be realized sooner than later. Testing the market should be done with a good CMA and market evaluation before you list it. Once it is on the market, it is not a test, it is for real. There is no testing about it. So the list high and drop it later idea should not even be considered an option.
I have had sellers say ” we had an appraisal done and it worth $$. Why that should not impress any good REALTOR is that the declaration while it may be true, was only true for the day and for the specific purpose it was done. Was the appraisal for a refinance, for instance. Most lenders will loan up to 80% of the estimate of value of a refinance appraisal and there is a protection built in not to over lend. The lender has a 20% cushion. If the purpose of the appraisal was not for selling the home it was to refinance it . And it was several months old. So it is up to the agent to determine who ordered the appraisal and why was it ordered? If it was not done with the explicit purpose of selling property and is more than a few weeks old, do not rely on it to determine current value.
An out of date appraisal for real property then is no substitution for a current CMA and an assessment of current market conditions. Once the seller has a qualified Buyers offer with the accompanying terms, The Appraiser who is hired by the lender to protect the lenders investment in the property, will either confirm the Buyers offering price or advise the lender of a different opinion of value. But the goal here is to even get to this point. Overprice the home and you won’t need to worry about what the Appraiser will say. There will not be an offer to warrant him giving his opinion of value.
One of the serious consequences of over pricing your home is that it will sit unsold on the market. It becomes shop worn and then it simply languishes on the market until it expires.
When you re-list the property, the market conditions have usually changed and not only is a serious price adjustment going to become evident, when it does finally sell it will be for so much less that it might have been when it was first introduced to the market
How did it get to market so overpriced in the first place?. If the agent takes the over priced listing with the hope that in time the seller will become more realistic over time, both the seller and the agent are going to have wasted a lot of time and some valuable resources.
A good rule of thumb is that if a property has been marketed correctly ( maximum exposure )and a you get ample showings with no offers, then it is flat out overpriced for the current market.
This should be realized sooner than later. Testing the market should be done with a good CMA and market evaluation before you list it. Once it is on the market, it is not a test, it is for real. There is no testing about it. So the list high and drop it later idea should not even be considered an option.
I have had sellers say we had an appraisal done and it worth $$. Why that should not impress any good REALTOR is that the declaration while it may be true, was only true for the day and for the specific purpose it was done. Was the appraisal for a refinance, for instance. Most lenders will loan up to 80% of the estimate of value of a refinance appraisal and there is a protection built in not to over lend. The lender has a 20% cushion. If the purpose of the appraisal was not for selling the home it was to refinance it . And it was several months old. So it is up to the agent to determine who ordered the appraisal and why was it ordered? If it was not done with the explicit purpose of selling property and is more than a few weeks old, do not rely on it to determine current value.
An out of date appraisal for real property then is no substitution for a current CMA and an assessment of current market conditions. Once the seller has a qualified Buyers offer with the accompanying terms, The Appraiser who is hired by the lender to protect the lenders investment in the property, will either confirm the Buyers offering price or advise the lender of a different opinion of value. But the goal here is to even get to this point. Overprice the home and you wont need to worry about what the Appraiser will say. There will not be an offer to warrant him giving his opinion of value.
