Many years ago I wrote the following article and published it to my first blog site. As I was thinking about the real estate market this morning the article came to mind once again. The advice directed towards home sellers in Macomb County hold even more true today.
What do you mean by “I have to sell my asking price 3 times?“
Mr. or Ms. Seller: Yes, you do have to sell the asking price for your home 3 times or you run the risk of the below scenario happening to you, especially in Macomb County Michigan.
1) You have to sell your price to attract a buyers agent. If you overprice the home I can guarantee that an agent working on behalf of the buyer will put it to the bottom of the list of homes to show their client.
Buyers agents in Macomb County have more homes available to them and their clients to view than we’ve had in recent years. The agents in Michigan are typically weeding through close to 100 homes in some instances that meet their clients criteria.
If you overprice your home from the start the agents will not consider your home for their clients. It is that simple. Please don’t make the mistake of thinking that your home will be shown if it is overpriced, and that buyers and their agents can read your mind about “Just bring me an offer – I’m negotiable.” Even if you ask your agent to note that in his/her remarks the likelihood of a buyers agent seeing that is next to nothing. We won’t even get that far because we won’t be pulling up your full listing information if it is priced too high to begin with.
2) You have to sell your price to the buyer. Buyers are savvy and educated. The typical buyer has already done their homework prior to engaging a real estate agent on their own behalf. They know the real estate market and the general values of homes in the neighborhoods they are interested in. They don’t want to become involved with an overpriced home and lengthy negotiations with a seller.
Why not? Because the home down the street is going to be very similar and priced well. They don’t have to consider your home. One more thing to consider: A buyer does not want to insult you with what you may think is a low offer. Most buyers I work with will ask me “Will this insult the seller?” Buyers aren’t your enemy – They want to work with you. They also don’t want to be dragged into a potential “left with bad feelings” transaction.
3) You have to sell your price to an appraiser. Let’s say you do receive an offer on your overpriced home. The next step in the purchase process is for your buyer and their mortgage representative to start working their way through that obtaining the loan. An appraiser will be hired by the mortgage lender. He or she will study comparable sales for your home, neighborhood, square footage, recently sold prices, etc. When the appraiser realizes that your home is overpriced the purchase agreement that you thought you had on your home will almost certainly be “dead”.
Why? The lender of the loan will not loan money to a buyer on a home that is not worth the asked for amount by that buyer. Unless the buyer is willing to come up with the cash to make up the difference between the appraised amount and your agreed upon purchase amount you will now have your home back on the market. The $30,000 you put into your basement? It isn’t worth $30,000 to the appraisor nor the mortgage lender no matter how much you wish it to be true.
When the real estate agent or broker you hire advises you on the real estate market and the changing home values please listen. Please ask questions. Please understand that agents and brokers in Macomb County are giving you the advice for a reason. We’ve seen the dangers of overpricing homes first hand and on a daily basis. We want to work with you and for you.
Price your home to sell 3 times: To a buyers agent, to the buyer, and to the appraiser.
If you would like advice on the market value of your home please don’t hesitate to contact me either via email or phone. I would be happy to discuss with you your home and needs in a non-pressured atmosphere.
Kris Wales - A partner for your real estate needs