You Have A Morbidly Overpriced Home And You Need To Shed Some Fat
There is a perfect parallel between sellers who have an overpriced home and people (like me) who need to lose some weight.
If you will indulge me with a weight loss preface, I can demonstrate that the solution to selling your overpriced home is as simple as losing weight.
Simple, but not easy.
How An Overpriced Home Is Like An Overweight Belly
My friend Ron Rice and I decided that we needed to lose weight. Not that we didn't look great carrying 270 pounds apiece (note sarcasm), but we felt the health benefits were moving rapidly towards "necessity."
This is not the first time in my life I have endeavored to lose substantial weight.
When I was a cadet at West Point, I played varsity football (offensive line) and carried as much weight as possible while still being active in the military aspects and training the academy required. I started my senior football season weighing 262 pounds, but needed to weigh 198 pounds (8 months later) to graduate at height-weight standards.
I was motivated to lose weight because I wanted to graduate on time. So I shed the weight during the second semester of my senior year. Losing weight was required for me to achieve my goal.
Simple. But not easy.
An overpriced home is like an overweight belly. You need to shed some asking price in order to achieve the goal of a sale.
Why An Overpriced Home Rarely Sells
If you are trying to sell an overpriced home, the reality is that you are going to be disappointed.
We like to advise home sellers that "buyers choose a price range, sellers choose the competition."
This means that with 95% of homebuyers using a property search tool on the internet when shopping for houses, the first criterion they use to whittle down the results is price.
That means that they look at a select group of properties, organized first by price, then by amenities, which leads them to find the best values in the market.
When you offer an overpriced home to the market, it shows up in home searches next to homes that are nicer.
Just as in the image above, your home will be compared to others that are priced the same, but the competition will be much better than your home.
So yours is not selected.
But you're thinking ... what about the 5% that don't use the internet. And what about the people that see the real estate sign in the front yard. And what about the people that dust off a real estate magazine and find me there?
I suspect most of them run to a computer to see how your home ranks against similarly priced homes.
But what if they walk in the door at an open house and want to buy it?
Well, the majority of homebuyers in the Tallahassee real estate market must borrow money to buy your home. That means their lender will only lend against the value of the home. Not against your asking price, but against an appraised value of your home.
An appraiser is not going to advise a bank to lend against the overpriced home excess, so a buyer would have to come up with the difference between what your home is worth and the amount for which it appraised.
Of course, if you found a cash buyer who was foolish enough not to do any due diligence, then you can sell your overpriced home. But that means ...
The only way you will sell your overpriced home is if you find an ignorant, rich person. I don't like those odds.
What To Do With An Overpriced Home
First of all, you need to consider your motivation for selling your home.
Just as my example showed my determination to graduate made it easier for me to lose weight, so too will your motivation for moving allow you to price your home to sell.
If you have been working with a real estate agent who allowed you to offer an overpriced home to the market, I would strongly advise you to interview other real estate agents. You should have received this advice up front, and the agent should not have pretended to market your home for sale at a price that could not produce a sale for you.
From the competent agents that you interview, I would require a supply and demand analysis for homes similar to yours, as well as a home value trend report showing how the market is moving for homes of your size in your general location. The detail that you find in those reports will give you an idea of how qualified the agent is to advise you on market value.
I'm not a fan of ordering an appraisal prior to marketing a home, because the appraisal function is not geared towards current competition, rather it is more of a lending value safeguard. There's plenty of people who fail to sell a home at appraisal value.
If you think you might have an overpriced home for sale and want an expert opinion on how to price it to sell, just drop me a note and we can schedule a time to review your home and your situation.
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