How Overpricing Accesses The Top 4 Buyer's Fears In The Wrong Way
How many times have you heard sellers say this?
Why can't we just overprice my property just in case there is someone out there that is willing to pay the price? We can always come down later if it isn't selling?
Here is the reason why that strategy doesn't work.
When you overprice a property, chances are that you will be sitting on the market longer than you should. How long should you expect to be on the market is different for every area but can be shown using the Visual Pricing System's Time to Sell chart. This chart can give you a pretty good indication of how long it should take for your home to close and how long it should take for your home to go under contract. So this graph should give you a pretty good indication on how long it should take before you sell your home.
So what happens if your home doesn't sell in that time frame, and it starts to "sit" on the market? How do Realtors see your property and how do buyers see your property?
First of all let's talk about the Realtor first.
When a buyer comes to a Realtor to find their new home the first thing most agents will do is a buyer interview, to really understand what the buyer are looking for. Once they have an idea of what matches the buyer is looking for they will do a search to see properties that match the customer needs. From that search they will have a list of properties. In most cases, the Realtor will "whittle" them down to a manageable set of properties for the buyer to review and pick from as their most interested options. The Realtor will then setup showings for those properties first.
While there may be several ways the Realtor will select properties, one of the key things the Realtor looks at is the Days on the Market. The Realtor will generally make sure that the buyer will see the most recent properties first. This is because these are the properties that haven't been picked over. If the buyer doesn't find a match with the recent, we can always go back and show the next set of properties which generally will start to include those that have been on the market longer.
So when you property is on the market for an extended period of time, Realtors tend to overlook it (generally for good reasons).
Your property has now been on the market for a period of time longer than it should. Agents are still showing it, but not first. Why is that? Sitting on the market does more than make your sellers nervous it also taps into buyer fears in this the wrong way. Sometimes this means eliminating a buyer’s fear that can help your sellers or triggering other fears that hurt the offer that a buyer will put in.
There are the four main buyer fears Overpricing
Triggers Or Removes.
To better understand each of these fears, we need to shift mentally into a buyer’s shoes.
Buyer Fear Number One: The Fear of Losing the Property they love.
When a buyer walks through a property and they love it, the first actual fear they have is that they have just found their dream home, but what if there is a possibility that they won't be able to get that property.
When a buyer finds their match, they start to think:
"If I really love the home, then maybe someone else does as well. I wonder if someone else is thinking about putting an offer in? What if someone slips in ahead of me?”
However, if the property has been on the market for an extended period of time, the buyer tends to think:
“Well it's been on the market for a while, chances are there isn't going to be someone else wanting this at this time. Or chances are this property will still be around as I continue to look around, since it has been sitting on the market for a bit.”
The loss of urgency and the removal of the fear of loss can stop offers from coming in, or hurt the perceived value of your property in buyer’s eyes.
Buyer Fear Number Two: There might be something else that is a better match than this home.
The second fear that buyers start to think is:
"Wow this is a great home, and it really matches what we feel a dream home is, but there might be another home which we haven't seen yet that is a better match. Shouldn't we keep looking?"
Now if the home they just saw is new on the market, they think
"We can't take the chance and lose this one."
However, they may be feeling that the need to look at more homes and if this home has been on the market for a while, they will easily justify that they have time to look at other homes. Especially if this home has been on the market for an extended time. In that case, they will always move along and continue to look and eventually they may even forget about this home as they focus on the homes that have been on the market much less time which they will have seen more recently.
This second guessing fear is one that every buyer will always have to overcome before committing to putting an offer in. If your home has been sitting for awhile then buyers will instinctively know that others saw this home and found better out there. This triggers this fear to go into overdrive and leave your sale stalled.
Buyer Fear Number Three: I might be paying more for this house than its worth.
The third fear a buyer has is that they are paying more for the house than its worth, or in some cases, paying more for the house than the seller would be willing to take.
This is another situation where if the house has been on the market for a while, this reinforces this belief from the buyer. The buyer will be thinking:
“Well this home has been on the market for quite some time and hasn't had an offer, so it is obviously over priced, or they will be willing to negotiate.”
This thought will still be present in buyer’s minds, even if the seller may have dropped the price recently. Certainly the buyer is now considering going for a much lower than list price offer, since he is thinking that no one else has bought the home, and the seller may be willing "deal" a bit.
If not, the buyer will consider going on for the next deal.
Buyer Fear Number Four: There might be something wrong with this home.
The fourth fear is that buyers are wondering if there is something wrong with the home.
Of course, we can state that the buyer has the opportunity to do an inspection and of course, as a result of that inspection he can decide to terminate the contract or ask the seller to fix things. However, this does minimal to alleviate any buyer concerns.
Buyers can have all kinds of imaginations regarding the potential problem a home may have. There obviously must be something wrong with the home, otherwise it would be sold already.