Homebuying: A Generational SnapshotAs we usher in the second Spring of the COVID-19 pandemic, we hope we’ll see a steady return to “normal.” Like other socioeconomic consequences
The True Cost of Overpricing Your Home (Even in a Sellers Market)
Dated: February 26 2021
The True Cost of Overpricing Your Home (even in a sellers’ market)
There is little argument, depending on where you live, home prices have surged double digits in the past year. Covid-19 lockdowns have caused many homeowners to remove their home from the market, perhaps out of fear, or simply due to changes caused by the events of the past year.
Other homeowners have taken advantage of record low mortgage rates and have decided to spruce up their home and stay a little longer. This is causing a shortage of available housing for sale. In Raleigh, we have 60% fewer listings for sale in January 2021 than we did at the same time last year!
Demand for housing in Raleigh, NC and the surrounding communities have caused the prices to surge
Demand for housing in Raleigh, NC and the surrounding communities caused by people fleeing states with draconian lockdown measures have caused the prices to surge even faster than they have been over the past 3 years. Some price points have seen upward of 35% gains over the past three years while most have seen 13 – 15% gains in the past year alone! Even communities that are considered bedroom communities are seeing homes selling for over asking price with multiple offers.
Despite these gains, some homeowners are attempting to push the limits of already beleaguered home buyers by pushing the listing price well beyond what is reasonable. There are 5 major risks of overpricing your home that ultimately could cost you tens of thousands of dollars which we cover in a separate post.
How to Sell Your Home for the Least Money
Here is a real-life example of how an agent agreed to list a sellers home with an inflated list price in one of the hottest real estate markets. In the end, the seller was unable to sell it for the inflated price, which ultimately cost the sellers nearly $50,000!
This lovely home was first listed for sale September 2020 for $379,000. Having personally walked through the home I can tell you it was in nearly flawless condition! There was no work needed all to get top dollar for this home.
After 45 days on the market without accepting an offer, and after a $20,000 price reduction the seller withdrew it from the market. Soon after withdrawing it the seller agreed to a sale to a national iBuyer whom shall remain nameless for $325,000.
This iBuyer is renowned for charging sellers between 5 – 12 % in fees and concessions *to buy their home. They immediately relisted the house for $355,000, presumably without any improvements, because it didn’t need any and the house sold for asking price without any financial concessions to the buyer in just 6 days!
Let’s recap, the seller ultimately sold their home for $325,000 to the iBuyer who charged at least 5% in fees or $17,750. Incidentally, 6% is the high end of what a listing agent in most markets will charge a seller for fiduciary representation who will then share that commission with a cooperating agent.
The iBuyer immediately sold the house for sale for $30,000 more than they paid for it thus costing this seller $47,750!
However, had they priced it appropriately to begin with, say around $350,000, they likely would have received over asking price and would have also had vigorous representation by their listing agent, something they did not have receive from the iBuyer.
What's Your raleigh Area Home Really Worth in Today's Market?
The lesson here, is do not over price your home. It will sit on the home for weeks and even months and you will eventually receive less money when you do sell. Something no seller ever wants to happen. If you are curious what your home is worth in today’s market, start by requesting your confidential Comparative Market Analysis from one of our local market experts.
With a background in real estate since 1996 Ricardo earned his broker’s license in 2015 and quickly became both a top producer and a leader in his market center by working exclusively with investors....
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