1) Over-Pricing and Being Reactive
Let's face it, when there is more demand, prices will go up. The only problem is these prices don't just go up over night. It takes months and usually years to see major price increases in a given area (if the market isn't artificially inflated of course). So assuming just because your neighbor sold his house for full asking price means that you can add a few percent on yours, won't pan out. Be realistic and review the comparables when setting list price. Also, if you get feedback from showings saying the home is great, but over priced, take that as a sign to adjust accordingly. Lack of showings might not mean it's overpriced, but a price reduction resets the listing in all agent and buyer saved searches, and gets more people interested in seeing your home.
2) Being Arrogant and Stubborn
Of course your home is the best on the block, and of course you've kept it beautiful, clean and pristine. Most sellers have an emotional attachment to their home, whether it's a sentimental attachment or perhaps an attachment based on all the work you've done over the years. My advice is to break that attachment and view it as just another house - have a Realtor's outside opinion on condition and value. You can't be over confident in this market because you'll only be setting your expectations higher than where they should be. Here are some common over-confident and arrogant assumptions to avoid:
- Assuming that any buyer is lucky to have your house.
- Assuming you can charge a premium because your home is so much better than the entire neighborhood.
- Assuming multiple offers are coming your way.
3) Accepting The Wrong Offer
There are two separate problems you will face when accepting offers, what to accept, and when to accept.
Accepting Any Offer: A buyer comes to see your house and automatically offers 3% above asking price. You've got other offers but they don't compare to this one. You accept it. Three weeks later when your home appraises around your original list price (not the 3% inflated offer), the buyer refuses to go forward unless you drop the purchase price to match the appraised value. Some buyers and scheming Realtors will do this in order to get an offer accepted over others, knowing it won't appraise. This is where carefully knowing your comparables comes in.
Accepting the First Offer: If you're very well priced, you should receive a large amount of showings within the first week. If you have a slate full of showings and great feedback, only then can you expect to have multiple offers. If that is the case, don't just accept the first offer. Have your Realtor follow up with all buyers that have shown interest and understand how many other offers may be coming in. At that point, you'll have the opportunity to get buyers to compete with their highest and best offer. Having multiple offers allows you to pick the best terms, conditions and most qualified buyers, not just the best price.
It's always good to understand where you can go wrong even when the market is tilted in your favor. Avoiding these mistakes will help you keep your cool during this hot market.
Jared Reimer is a real estate expert at Prudential Rocky Mountain Realtors in Northern Colorado. Real estate is his passion and he always wants to connect with like-minded and savvy real estate fans. For more information or to get in touch with Jared, please visit his website at www.ReimerRE.com or email him at JaredReimer@ReimerRE.com