Should Sellers Test the Market?
Unless you all have not been told enough yet, our real estate market is experiencing a seller's market. This simply means that there are not enough homes for sale for the number of buyers that are currently looking to purchase. In other words, there is a high demand for homes while there is a small inventory. A seller's market creates more leverage for homeowners looking to move on from their current homes.
When the real estate market experiences a seller's market, families listing their homes are often tempted to suggest a price at a higher price than what the market would suggest. For example, if a current seller sees that other similar homes are selling for $250,000, some sellers might try to list their home for $270,000 or even try their luck at $280,000 to try to take advantage of a surging market. Yet, with a big reward, there are also big risks. This is all too common, and often has a common way of playing out. Let's hypothesize that this seller has met with an agent and the agent recommends putting the home on the market for $275,000. The agent reluctantly agrees to follow the seller's strategy.0
In this scenario, let's pretend that this seller does not heed the advice of their agent and decides to list the house for $30,000 above what their agent suggests. For the first week, the home gets tons of showings, but the homeowner does not receive an offer. In the next week, the number of showings has significantly dropped. Feedback from the showings include, "the home needs too much work at this price point," or, "buyers have found another home that suits their needs better."
The home in this simulation sits on the market for a month, without an offer. Then, the home sits on the market for a second month, still without an offer. In the meantime, the sellers have now made two mortgage payments while they wait for the home to finally sell. The home finally sells for $255,000. The sellers in this simulation extra mortgage payments, increasing their overhead, for an extra $5,000 on the sales price.
For sellers interested in testing the market, it is very easy to price the home out of contention. Overpriced homes often take longer to sell. If you are a homeowner thinking about testing the market, remember that the market will test you in return. At Tyre Realty Group, we recommend consulting with a qualified agent who knows how to sell homes for the most profit while selling homes at a quick pace. Our highly qualified listing team can help you price and sell your home accordingly. Contact us today to start the home selling process!