There can be no question about it, the El Dorado Hills real estate market has softened since last Spring.
Ask any buyer, they are not feeling the same market pressure to submit offers as they did last Spring. In fact, many think that if they wait, they might even be able to buy your home for less money than you’re asking for it today.
So, how do you price your home to sell in a softening market?
The first thing you need to recognize is that we are in a new real estate market. Even if sellers don’t want to hear it, you can’t price your home like you would have nine months ago. Making the mistake of overpricing in a softening market and hoping for a buyer can be an expensive mistake.
First, let’s cover some immutable real estate truths:
- What you paid for your home doesn’t affect its value!
- The amount of cash you need from the sale of your home doesn’t affect its value!
- The asking price you want for your home doesn’t affect its value!
- What another real estate agent says your home is worth doesn’t affect its value!
- What an appraiser says your home is worth doesn’t affect its value!
The value of your home is determined by what a BUYER is willing to pay for your home in TODAY’S MARKET based on COMPARING it to others currently on the market for sale.
BUYERS ALWAYS DETERMINE HOME VALUE!!
To Determine How To Price Your Home to Sell in a Softening Market, Put Yourself in the Shoes of a Buyer
In a rising market, a buyer sees increasing equity in the home they are buying so the risk of overpaying is lessened. If a buyer overpays in a strong market, the rising market will catch up with the sales price. The worst thing that happens is the buyer sees less equity gain and in return they get the home they, and probably several other buyers, wanted.
In a softening market, the opposite is happening. A buyer that overpays in a softening market is risking losing equity! Not only are they risking losing equity upon purchase, they are risking losing additional equity if the market continues to soften!
A seller that overprices in a softening market also risks losing equity!
This is why it is so important to properly price your home to sell in a softening market!
To simplify, let’s say comps show your home is worth $800,000 in today’s market. You roll the dice and price your home at $835,000 in hopes of making a larger gain or leaving yourself room to negotiate – both common seller mindsets.
Your home hits the market and… nothing. Few showings and no offers.
After a month of no activity, you lower your price to $820,000. Now, though, since the market is softening, comps are showing your home’s value to be $795,000. So not only are you still overpriced, the market is telling you your home is worth LESS than you could have sold it for a month ago had it been properly priced!
As you continue to lower the price over time, you continue to chase the market down until you finally catch up with decreasing values and ultimately sell your home for LESS than you would have had it been priced correctly to begin with.
Buyers, recognizing the softening market, are not buying overpriced homes. Just the opposite, in fact.
Buyers in a softening market are buying homes priced at their true market value or, even better, the homes that are priced at next month’s lower value!
In a softening market, a seller with an overpriced home will continually have an overpriced home as they chase falling prices. The result, in a softening market, an overpriced home will typically sell for LESS than it would have sold for had it been properly priced from the outset!
So, how do you price your home to sell in a softening market?
It’s extremely important that your home be priced ahead of the market. Buyers, aware that home prices are possibly dropping, are looking for homes priced where the market is heading. The best way to sell your home in a softening market is price your home where think the market will be next month! That means, the best way to price your home to sell in a softening market to achieve the highest value is to price it slightly below comps!
If you want to get your home SOLD, let us show you the difference the Yoffie Real Estate Group brings to our sellers. You won’t be disappointed!
READ MORE ABOUT DETERMINING YOUR HOME’S VALUE
CURIOUS ABOUT YOUR HOME’S VALUE IN THIS MARKET? GET YOUR FREE HOME VALUE REPORT!
