On the recommendation of your real estate agent, you’ve listed your home for a competitive price, but the offers come pouring in and now you’re wondering:
“Yikes! Did I just miss the chance to make a killing on this house?”
Buyer’s remorse is a real thing, but what if the emotions you’re experiencing feel more like seller’s remorse?
Don’t let regret for all of the money you could’ve cleared from your house sale warp your point of view. Let’s talk about what happens when it feels like you’ve priced your home too low.
Are These Signs Your House Price Is Ridiculously Low?
You’ve competitively priced your home to sell, but you’ve received 10 offers in the first week. Is this a sign that you could’ve made even more money?
Don’t confuse a seller’s market with underpricing your home. In a seller’s market, it’s normal to receive a plethora of competitive offers that are above your asking price. You can work with your real estate agent to make a credible guess about the price the market will bear, but remember that desperate buyers can be unpredictable.
A neighboring house sold for $30,000 more than your house. Did you just lose out on $30,000?
Make sure you’re comparing apples to apples when you look at nearby homes and discuss comps with your agent. Did your neighbor update their kitchen? Is their lot size bigger than yours? Has the market softened since they sold a few months ago? Don’t assume that homes with similar exterior conditions also have similar interiors. Just one extra bedroom or garage bay could have increased the price of your neighbor’s home.
How Pricing Too Low Can Work in Your Favor…
One of the cardinal rules for listing an item for sale on Craigslist or Facebook Marketplace is to name a price that you’re willing to negotiate down. For example, if you wanted to sell your couch for $500, you’d ask for $600 so that if the first interested buyer wants to offer you less, you can still hit your targeted price.
The housing market doesn’t work like this.
No matter what you paid for a house, or what the appraiser says a house is worth, a house is really only worth what a buyer will pay for it. That means that if a house is listed at what looks like the insanely low price of $100,000, then buyers will bid each other up to the market price.
Pricing your home slightly below comparable homes as a marketing strategy could work in your favor if you do it just right. A low price hypes up interest in your home, and it could result in a bidding war that pushes your home far above your best expectations.
Pro-tip: You should still build a small cushion into your listing price for offering concessions on house repairs or closing costs.
…And When Pricing Too Low Could Backfire
As a marketing strategy, pricing your home too low could backfire in a buyer’s market. Since there’s a much smaller pool of buyers, you don’t have as many negotiating tools at your disposal to drive the price up. If there’s a glut of homes for sale, then buyers are going to be more price-sensitive and they might happily jump on your low-priced home.
When you’re in a time crunch or a distressed situation, your options may be limited. You may need to sell your home to cover debts, relocate out of state, settle a divorce, etc., and need to move immediately. You may not have time to wait for buyers to bid each other up, and your time constraints may lead you to accept the first offer you receive.
If you’re not in a hurry, remember that it’s okay to refuse a lowball offer. Your Realtor will be able to advise you on your specific market conditions, the likelihood that you’ll get a better offer, and your best strategy moving forward.
Why Overpricing Is More Dangerous
If you’re worried about setting your house price too low, consider that real estate agents warn again and again that there is far more danger in overpricing your home.
A stale listing that sits on the MLS will cost you money as you wait for it to sell. And as you discount the original price after not receiving any bites on your listing, you’ll enhance buyers’ perceptions that there’s something wrong with your home.
That’s why nailing the right price the first time you list your home is so important. AgentStory helps you find an experienced agent who’s a selling guru with a proven track record to move your home’s sale quickly and at the perfect price.
The Bottom Line
Here are a few final strategies to keep in mind when you receive an offer that makes you wonder if you’ve left money on the table:
- Agree to respond to all offers within five days. By setting a time limit, you’re giving other buyers a chance to compete to get their offers in and potentially drive up the price.
- You can turn down or counter any offer you receive that’s below the threshold of what you’d consider acceptable.
- Rely on your real estate agent’s advice for the conditions of the market. Is the buyer’s offer truly competitive? Is it a sign that the market is softening? A savvy agent will be able to advise you on market conditions.
Keep the lines of communication open with your real estate agent about the best pricing strategy to help you sell your home at a price that will give you a boost into your next stage of life. Your agent should be able to explain why they chose that price point, and address any of your concerns.