When you're pricing your home, it's always tempting to ask for a bit more than you expect - to leave a little room for negotiating. But this strategy actually doesn't work.
According to industry experts, houses priced 10% over their ultimate selling price typically receive no offers. In fact, even houses priced a mere 5% too high will typically get showings, but no offers. If you start too high, you'll have to gradually lower your price over time until you find someone willing to buy.
In real estate, "gradually" is not great.
No one wants their house to sit on the market. Not you. Not your agent. The DOM (Days On Market) of a home is the leading indicator as to whether it is priced appropriately.
In Montclair, the average DOM is 50.
Examples of homes priced too high: 363 Park Street - Original price: $1,450,000; DOM-370 Offers started when price was dropped to $1,199,000
18 Capron Lane - Original price: $1,200,000; DOM-170 It sold when the price was lowered to $989,000
Even a house listed at its "correct" price - that is, the price it is likely to sell for - may not be ideal for the seller. Studies show that the market responds most enthusiastically when houses are priced just below their true value.
When a home is listed at about 5% under its ideal sales price, the property nearly always sells for more than asking, and often substantially more. This doesn't make complete logical sense, so it requires a leap of faith on the part of the homeowner. As a seller, you need a strong stomach and a good realtor who knows the market and how to price at that sweet spot.
Here's what happens when houses are priced to sell:
117 Haddon - Listed $699,000; Sold $826,000; DOM-11 19 Windsor - Listed $699,000; Sold $838,000; DOM-9 131 Wildwood - Listed $899,000; Sold $111,0000; DOM-10
When clients ask me how much negotiating room there should be when pricing their Montclair home, the answer is none.
If you'd like to talk about home pricing, or get a better sense of the market, call me. I love to talk real estate! 973.809.5277