Because of the change in real estate market conditions, more sellers are competing for fewer buyers. So once again, it seemed important to challenge a long-standing "myth" of real estate.
"The initial listing price isn't that important because the price can always be adjusted down later."
Many homeowners believe this. It is a myth. Not true. If most buyers first viewed your house because of a newspaper ad, a magazine, the internet, brochures, or the sign in your front yard, the initial listing price probably would not make a difference. The house would always be "new" to those seeing it. But most buyers do not come to your house because of various types of advertising. That is the another myth. Sure, buyers call on an ad, they often look at that house, but not always. Once they talk to a broker, they may discover it isn't what they need or want at all.
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However, they are talking to a broker and the broker knows the current inventory and will know of other property that does fit their needs. Those are the properties that buyers look at, and this is how most buyers end up looking at your house, too … because of other brokers not because of your ad. Hardly anyone buys the house in the ad. As a result, you need to get other brokers interested in your property, and this is where your listing broker comes in ... and why a good listing broker is extremely important. The listing broker gets buyer's brokers looking at your home.
Buyer's brokers are not swayed by advertising. They look at the needs of the client, where the client wants to live, location, condition, and other details of the property. And most importantly the price.
If your house is overpriced, brokers are going to show similar homes that are priced more attractively. Your listing will get passed over. Brokers pay most attention to homes newly on the market. There are fewer new listings than current listings so it' s easier to keep an eye out for what’s new, compared to the vast number of current listings.
New listings are on the "hot" sheet circulated in real estate offices. The MLS computer identifies new listings. There are office previews and MLS tours to showcase new listings. A lot of attention is focused on what is new. With brokers looking at newly listed homes so aggressively, a properly priced home gets attention. An overpriced home gets passed over.
You may be thinking, "But I'm willing to negotiate!" But buyers aren't thinking in advance about how much you are willing to negotiate. They are comparing your asking price to other asking prices. Plus, when your house is new on the market, you may not be willing to negotiate as much as you will later, once you've realized your error. Keep in mind that statistics show, quite often, the first offer is the best offer. So what happens if you overprice in the beginning and get more realistic later?
You don't have all those important Buyer's brokers looking at your listing because it is new. A price reduction later in the listing cycle often gets overlooked. It is just one of many listings, not one of a few new listings. As time passes, you could actually become desperate to sell because you've accepted a new job or because you have already bought a new home. That is a recipe for receiving lowball offers, so you could end up selling for less than if you had priced the home correctly in the first place.
Brokers know this stuff, but many sellers still mistakenly believe they should "price it high" because they can lower the price later, if necessary. That is not the best strategy.
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