Many renters are now eager to escape urban apartments in favor of suburbia. One factor is the quest for more space, especially among those working remotely or schooling their kids from home due to COVID-19. Another is that mortgage rates are hovering near historic lows.
The result is that in popular neighborhoods where listings are in short supply, properties are flying off the market. That’s making owners more self-confident. But real estate specialists caution sellers about the perils of pricing too high.
Mary Bazargan, a listing agent in Washington, D.C., explains why it’s foolish for sellers to price too boldly -- even where inventory is low and houses are selling quickly.
“When we price a new listing conservatively, we’re getting multiple offers, and these homes are often selling above list price. But if we push the price aggressively high, the home tends to sit on the market for a while,” says Bazargan, who works for Redfin, a national real estate brokerage.
Eric Tyson, a personal finance expert, agrees that those who attempt to test the market with too high a price typically attract fewer prospects.
“Buyers who shop with an agent usually shop with a top pricing point in mind. They won’t see properties above that pricing ceiling,” says Tyson, the co-author of “House Selling for Dummies.”
Moreover, due to internet sleuthing, buyers are increasingly savvy about property valuations. Many are annoyed by the appearance of greed on the part of sellers and refuse to bargain with those who ask too much.
“Remember that Americans don’t like to haggle. So don’t count on buyers engaging with you in multiple rounds of negotiation,” Tyson says.
Here are a few other pointers for sellers:
-- Research local valuations before hiring an agent.
Sid Davis, a Utah-based real estate broker, notes there are now a number of websites that offer free and instantaneous assessments of home values. Among the best known are Zillow and Redfin.
But it's unrealistic to look to such “fast pricing” sites for a definitive answer on the current worth of your place. After all, they typically rely heavily on publicly available data on recent home transactions. And some jurisdictions restrict or delay the release of such statistics. Still, such sites can sometimes give you a fair estimate.
“At least they’ll help you get into the right ballpark on the current value of your house. This gives you a starting point for a pricing discussion with the agents you interview,” says Davis, the author of “A Survival Guide to Selling a Home.”
Another way to gain a feel for prevailing prices is to attend open houses.
“In 15 minutes, you can visit two or three nearby open houses -- if only virtually -- and get a sense of pricing realities in your neighborhood. You can also get a preliminary comparison on the condition of your home versus rival properties,” Davis says.
-- Talk to multiple agents before choosing one.
When planning to sell, many owners instinctively turn to a friend or relative in the real estate field. But Tyson cautions against hiring someone from your inner circle, even if that person is an active agent in your neighborhood.
“We all want to hear how wonderful our house is and how much it’s worth. That makes it very hard for your friend or relative to recommend a realistic price tag,” Tyson says.
Interview at least three agents working in their area, and don’t pick one who relies on hunches.
“Ask each agent for an honest evaluation of both the condition of your place and its present value. Make sure each agent shows you the comparable sales they used to make their price recommendation,” Tyson says.
To determine if an agent is truly active in your neighborhood, he suggests you ask for an “activity list” of all the properties the person has listed there during the prior six to 12 months.
-- Examine each agent’s track record on pricing.
Even now, many sellers don’t receive their full asking price at the closing table. But if their property was marked accurately from the outset, they should come fairly close.
“Nobody wants to suffer huge price reductions because they asked way too much at the beginning,” Davis says.
To assess an agent’s pricing recommendations, look at a few key numbers that reflect his or her track record. If the agent is routinely making accurate price recommendations, there should be relatively little disparity between the original list price and the final closing price.
“Sellers shouldn’t have to knock down their price just to get their property sold. In most cases, their home should sell for no less than 5% under the asking price,” Davis says.
He suggests you ask prospective listing agents to show you “list-to-sale” numbers for all the homes they’ve sold during the last 90 days.
-- Don’t let your pride get in the way of accurate pricing.
Some people assume listing agents are motivated to price low with an eye to quick sales. But Davis says the greater risk is that occasional agents will recommend too high a price in hopes of flattering you into working with them.
“This practice is known in the real estate field as ‘buying a listing,'” he says.
Overpricing can even hurt owners in an area with few homes on the market.
“It doesn’t matter if you’re selling in a neighborhood that’s hot, cold or lukewarm. Asking way too much can easily kill your chances for a fast and successful sale,” Davis says.
(To contact Ellen James Martin, email her at email@example.com.)