Sunday, December 1, 2019 / by Jessica Nager
Everyone wants to sell their house for top dollar, but did you know that pricing your home for a high amount is not the way to do it? You might be surprised to learn that your best chance of making the most on your sale is by limiting your market time. The fact is that a lower market time = a higher offer price, so you’ll want to read carefully if you’re looking to make the most of your property.
The Importance of The First Few Weeks
When you list your house for sale, you’re going to get the most traffic within the first few weeks your property is on the market. Why? Serious buyers and real estate agents that have been scouring listings for weeks will be looking for fresh deals—and you’ll be the new kid on the block. The buzz created by your emergence on the market creates a sense of urgency amongst buyers. They’re going to want to schedule a showing to make sure they have a chance to get their bid in before the property’s gone.
This is great news for you, as you’ll have the upper hand in negotiating. Your highest offers are likely to occur within the first 30 days of listing your home, especially if it’s a great deal that’s too good to pass up. The interest that’s generated in these early weeks, though, doesn’t necessarily have to do with the price of your home—and the reason may surprise you.
Why Buyers Will Pay More For Your House With Shorter Market Time
Have you ever wanted something more because it was no longer available? Real estate is no different. When something hot and new comes on the market, buyers will experience an underlying fear of possibly losing out to someone else. This will propel their urgency to act, resulting in the most offers in the first two weeks of listing.
For most people, the thought of their dream house being sold to someone else will not be worth the $5-10k of negotiation. If they realize their monthly payment won’t be overly affected by haggling, they’re more likely to put in an offer to beat the perceived competition. People will also pay more for something if they feel there’s a chance that they could lose it.
If you want to sell your home fast, pricing your home aggressively upfront is better than starting out with an unrealistically high number. This will give you a much better chance of getting the best offer before you accumulate too much market time. If you’re not receiving enough activity and showings in your first few weeks, chances are you’ve priced too high. Price change immediately; the market will tell you when to make a move based on the number of showings your receiving.
Why Too Much Market Time Is A Bad Thing
The longer your property sits on the market, the more buyers will assume they have room for negotiation. After 30 days, they will have room, and they will try to negotiate with you. They’ll often reason that the house is overpriced and that, if it really was a good deal, it would have already sold.
FOR EXAMPLE: There are two identical houses listed for sale on the market. One has been listed for 6 months, and the other was listed yesterday. Which one do you think you’d have more room to negotiate on? Of course, it would be the one that’s been on the market the longest and hasn’t yet sold.
This is the exact reason that market time so important. Too much accumulated time will create a stigma amongst buyers that something must be wrong with the house. Buying a home is a huge purchase decision, so expect that potential buyers will be doing their homework on properties they’re interested in. Knowing the market time of your house will be part of that research. If you price your property too high in the beginning and take too much time “testing the market,” you may end up making less money in the long run.
When I’m working with a buyer and see a home with longer market time, I’m more likely to advise my client to start off with a much lower offer than the property is listed at. A house listed for a long time on the market will be getting fewer showings and less traction, and the seller will probably be on the verge of making a price change. This is the time period where some of the best deals can be made, and a buyer would want to catch the seller at this crucial juncture.
My Advice To You
Now that you know how market time affects the money you’ll make on your home, my advice is to price your property according to what the market is telling you. Realtors, sellers, and buyers do not create the market—we can only adjust to it. Set your start price as reasonably high as you can, but be prepared to make a change quickly if you’re not getting enough activity. That’s why you’ll want to have a preplanned pricing strategy in place before listing.
Having a good marketing plan in place will also increase your chances of reducing your market time, as long as your home is priced right (usually if you’re getting 5 or more showings a week). If you’re getting 15-20 showings at your list price without an offer, then it’s probably time for a price change—unless you want to wait it out for someone to throw a lowball offer your way.
If you need any additional help in determining what your 30-day sale price should be, please don’t hesitate to reach out to us. We’d be happy to help!