Overpricing Your Home: The 5 Pitfalls You Don't Want to Encounter

In this episode of "Another Day in Real Estate," host Middy Matthews dives into the five dangers of overpricing your home. With the real estate market shifting, Middy shares insightful observations and practical advice for sellers. From understanding buyer perspectives to the impact of overpricing on home searches, Middy provides valuable insights that can help sellers avoid costly mistakes. Additionally, she offers tips on easy home improvements to enhance the appeal of your property. Tune in and gain valuable knowledge about navigating the real estate market and making the right decisions when selling your home.

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Middy Matthews
Licensed Realtor, Arbor Move Team
The More Group
734-239-3796 | ...

Transcript

0:08

Hello and welcome to it's another day in real estate. I'm Mitty Matthews from the Arbor Move team, and I'll be flying solo today. It's just me out there. Welcome to our podcast, where you'll learn the ins and outs of buying and selling a home one piece at a time. We hope to help you understand the process so you feel more comfortable in it and are making informed decisions when it comes to your purchase or sale. Let's jump right in. Today's good day. We are looking at the last quarter of 2022, and right now the market is changing. So I thought I'd throw a podcast out there. Let's talk about selling your home this morning, and most importantly, the five dangers of overpricing. Here's what I've seen in the market recently. We have had an overinflated seller's market last year, and what happened was a lot of people continued on that path, saying, I can get x amount for my dollar, for my home, and then overpriced the heck out of it coming into this market, which is looking at a more equal, normal market. And the buyers that are left are not the buyers who want to overpay, are not the buyers who needed to buy. They're probably half of those are left over from last year who didn't get a house. They're tired, they're exhausted, and they're downright angry. They're tired of losing. And it's hard because this is an emotional process. So understanding the market from the buyer's perspective, they're not as eager anymore. They were eager coming in. They were ready to buy a home. Now they're leasing again or they're sticking it out. They're staying in their home until this equalizes. The rates went up. People were sort of used to seeing that 3% rate in the market, and it's not normal. 3% was, according to my lenders, they were just giving away money. What we're at right now, 6%, seven, even what we're going to be looking at soon and rising is kind of normal. This is pretty normal. It's just what your viewpoint is, what your vantage point looks like. And if you came into the market at 3%, being a first time home buyer, it's what you're expecting to see. So we've set the expectations at 3% as normal, and it is not, we may never see it again. The lenders aren't making any money that way, and they were just trying to get the market running again. So let's talk about how to sell your house in this market, which is not a bad market at all, but you've got buyers who have a little bit less money than they did last year, and a lot of last year's people had extra cash. So we are in the more middle group of buyers here. I think we've run out of the market buyers with a lot of expendable cash. I mean, granted, there's plenty of people with expendable cash who are still buying houses and are looking today and have more solid, but a lot of these people that are buying today are mortgaged people. They have their down payment. They may even have 20% without a problem, but they don't have another 50,000 to throw at it basically into the wind because it's multiple offers and we're not looking at multiple offers anymore. We're not. I'm seeing some home price reductions. I'm seeing, yesterday I saw four houses, condos, townhome style condos on the market, all within the same block. So there are lots more coming on the market, which means more competition if you're selling your home. So let me tell you, if you want to sell in this market, you have to really understand what your home is going to sell for and have a really good price in mind. And the bottom line is a house is worth what somebody is going to pay for it. There is no magic formula other than what other homes have sold for. And you need to compare what they look like inside and outside, their condition, their upgrades, their amenities. Do they have a finished basement? Finished basements don't count for more space, more livable space, not in Michigan, but they certainly will account for more livable space in somebody's head and more worth to the property, although not on right. So in a better know, a better kitchen is going to look better. And I can tell you some of the easiest fixes in the kitchen. If you're looking to sell your house and you want to upgrade your kitchen, but you don't want to spend a million dollars doing it because you're only going to get dollar per dollar, the same thing back. You may sell a little faster, but you're not going to get all of your money back, or depending on how you spent it. The best way to redo a kitchen to make it feel fresh and new is spend a couple of $1,000 on new countertops. And granite is not expensive. Don't be confused. It really isn't. A granite countertop is very reasonably reasonable. Put in a new sink, put in a new backsplash and then paint your cupboards and that will make the entire kitchen feel fresh and new, and you will sell that house a lot faster. So let's get back to our subject matter today, which is the five dangers of overpricing. And I'm not kidding, you can actually shoot yourself in the foot pretty hard here. This whole like, well, let's test the market. Let's put it on for X amount of dollars and see how we do. Well, you don't have the time to do that because after a house has been on the market or a condo has been on the market for two weeks, it is now deemed something's wrong with it. Something is wrong with it. It has not sold right away, especially after the last two years of this market. People real believe that if it's sitting on the market, it hasn't sold. There's probably some reason. And that's the questions I start to get. Why is it sitting? Well, I don't because my houses are priced right, so they go pretty quickly. I think the forefront of this conversation is use every ounce of your time in getting that pricing right, right out of the gate. And here's why. If you are overpriced, you'll probably get a lot less showings right out of the gate. Because people are really smart. Consumers are smart. Don't put it past them. They know what's going on. They are looking at 20 houses around yours. And if yours for that price is higher than everybody else's price, that's not the house they're going to look at first. And if they do look at that house, they're going to expect it to be that much better than every other house around. The consumer is very smart, so your house is going to get less showings, period, right out of the gate. Or if that's comparable to houses in a better, deemed a better community, a better, nicer neighborhood. Every neighborhood has a range that it can sell its houses in in sort of a median range of what the price point is. And if you have jumped into the next neighborhood, the neighborhood just above yours, into their price point, why wouldn't those people just move on to that neighborhood? They will. They're looking in a different neighborhood than yours. So they're not going to come back to your neighborhood if that's not what their price point allows. If they allow them to go into a neighborhood that's perceived as nicer or better or better location or whatever it might be, they're going to go there first and they might circle back to yours but they probably won't. They're smart. Consumers are smart. So if you get fewer showings of your house, it's going to sit longer. And this sit longer thing is the kiss of death. I'm telling you what, you do not want your house to sit on the market. So you'll get fewer showings because the other houses around you, whatever's selling around you for less money will be the first ones to go. They'll get the first showings. Everybody will look at those houses first. They won't come to yours or they'll look at yours, but they'll go to the next house over or you're attracting the wrong buyer. Item number two is you are attracting the wrong buyer. So if your house is priced, like I said, into the next price point, you're attracting buyers who are going to expect it to be a different house than yours probably is. So they're expecting more. They're coming into your house and they might be disappointed. The size, the condition, the location they're coming in. You've attracted the wrong buyer. The buyer who has more money than your house is worth. If you're testing the market to see if it'll bring that, it won't. You need to price your house right. That's the key here. You're also going to lose out in the home searches. Like if you put your house on the market, let's say your house is probably worth 480, and you're like, let's test the market and put it in at 510. Okay, it doesn't seem like that big of a stretch, but here's what happens. Everybody who has a home search from 350 to 500, which is exactly the buyer you want. They are not going to see your house. It's not going to show up on their search because you've just priced it into 510. So you want to be really cognizant of jumping over those little barriers like the $500,000 barrier, the 350 and the tens all the way along the line, those make a big difference. Generally your lenders will do a 353 75. They will pre approve you for segments like that. So understand where those price points stop and start and make sure that you are collecting the right buyer for your house. That's really important. Pricing the home. I see some newer agents price a home at 499, but people who are looking from 500 to 600 range and people do lake these pretty small windows are not going to see your 499 home. You want that to price at $500,000. You don't want it to price at 499. That may work in the supermarkets, but it doesn't work for homes. You're going to lose out on searches. People aren't. You're not going to show up in anybody who's got a bottom line of $500,000. And those 100,000 markers are really important in the scheme of things. If you price your home 20,000 more than the guy right down the street, you're actually helping his sale. This is my third point, is you are helping his sale. You're going to sell his house a lot faster. Now, the people who didn't buy his house will look at your house, but they'll say, this is overpriced. And a lot of people don't say, well, why don't we offer less? They just walk away. You have to also consider that 80% of the realtors are new within the last two years, and this is the turnover rate for real estate, because it is not a market where you can come in and just make a lot of money. It's not. And it's unfortunate that people think that. So a lot of people come in and think, well, I'm just going to make a ton of money, but it's actually costly to be in the business. You have to understand how to run your own business. So you're looking at 80% of the realtor who are pretty new to this market and not sure what they're doing, and they're not going to tell their clients, you know what? If you like this house, we could offer less. Bringing your house back down into the right market. No, they're just going to walk away. These buyers are going to say, forget it, this isn't worth it because I've heard it with my own ears. They're going to say, this house isn't worth this, and they're going to walk away and you're going to lose a potential buyer because you overpriced. And that's the bottom line. The most important one to me is this last one is spending too long on the market. And everything else really leads up to this one. This is important. If your house spends too much time on the market, two weeks, three weeks, a month, back in the day when we have had big books and it was harder to get out and see houses and your realtor had to thumb through a big book and look for a house, the turnaround time was a lot longer. The expected time for your house to sell was three months. You got to find that buyer. But people move more frequently and they are quicker to look for houses online. Most buyers find their own house. They do. They find their own house online and they tell their realtor, I want to go see this. The realtors will set up the feeds, or sometimes, even though my clients have a feed set up and they're getting the same information, sometimes they're digging around at work on Zillow or some other place and they send me a house. Zillow also doesn't have great information. They regurgitate old listings that were very hot because Zillow's real purpose is to sell buyers to realtors. There, I've said it. So they're in sales. Zillow is in sales. And they're not selling houses. They're selling you. They're selling the buyer. So anyway, the bottom line is, do not overprice your house. If your house sits for two weeks, it's still okay. Three weeks, people start to wonder what's wrong with it. A whole month. Right now, people are like, I don't think I'm even going to see that because there's going to be some wall beaten in or it's going to need too many updates. There's something wrong with it. There's reasons people haven't purchased it. I saw a condo yesterday that had been on the market since August, but here's what happened. I can look at the history. So it went under contract in August, and the buyers walked away for no apparent reason. They actually got through the inspection period with no issue. I mean, these condos are not very old and pretty basic. I wouldn't think that there'd be any inspection issues. And I saw the condo with my own eyes. These clients, the owners, were good owners, clean. They clearly took care of things. All the mechanicals were new. There was a new heating element. There was a new water heater and a new air conditioner because we saw a unit in the same building that had older mechanicals and this one didn't. It even had newer appliances in the kitchen. They had put in some new floors. I mean, of the four that I saw, this was the nicest one, but it had been on the market the longest. And I don't know why it's still sitting there, because there were four condos, all of which were very nice, but this one was clearly ahead of the others. But since it was on the market and the buyers walked without real reason other than they just changed their minds. Now it looks like this thing's been on the market to the general public for two months, but it really hasn't it came back on the market a couple of weeks ago. So unfortunately, it makes this condo look like it's got problems. So we will probably go in and snag it. So that's my main thing today. I wanted to throw in a few easy home improvements to help you sell your house. I want you to think about three major things. Curb appeal. I know it's fall. It's fall. Just clean it up. Make it look nice. Clean out those weed beds for the year. Do a few things. If you're really thinking about selling, just make it as tidy as possible. Throw down some new mulch. I mean, there's some simple things you can do. Take a look at your house with fresh eyes and say, what can I do to make this place look pop? Maybe if you have shutters, paint them. Sometimes that's the simplest thing you can do, is paint some shutters. Something that looks a little tired and old. Pop them. Paint them. Do it. Rake your beds, clean out your gutters. Anything that looks just, you know, give it that last wash. I know we've got freezing temps coming, so it's now or never here in Michigan anyway. And paint. Do you have any rooms that look super tired? Paint them. Because that paint smell, it's like fresh bread. It really permeates, makes the place to feel clean and like it's new. And people want that. It's a used house, but they want it to feel shiny and new. For them, it's like a new car. And then focus on those kitchens and bathrooms. Like I was telling you, the simplest fix in the kitchen is countertops, backsplash, and paint those cabinets. And new hardware. I don't think I threw that one in before, but new hardware in the kitchen is something to be behold. It helps that paint really pop. But thanks for listening today. If you have any real estate needs, if you want to get a hold of me, all the information should be uploaded with a podcast. Arbor move team is waiting to hear from you. We sell houses and we sell them pretty fast, so let me know if you need my help. Midi m I d d y Matthews at the Arbor move team. You can contact me at seven three. Thanks for joining us today. Remember to subscribe to learn a little bit more about real estate every week. Thinking of buying or selling real estate in the Ann Arbor area? Reach out to Clayton Kendrick at Academy mortgage or me, Midi Matthews of the Arbor move team over here at the Moore group. For your home search needs, head for Arbormove.com and find your dream home today. Thanks for joining us today. Remember to subscribe to learn a little bit more about real estate every week. Thinking of buying or selling real estate in the Ann Arbor area? Reach out to Clayton Kendrick at Academy Mortgage or me Midi Matthews of the Arbor move team over here at the more group for your home search needs. Head for arbormove.com and find your dream home today.