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There is no doubt that Denver area homeowners have been enjoying record amounts of appreciation for most of 2021. Because of this, it may lead homeowners to believe that when selling they can’t price their Denver home too high. There might have been a small amount of truth to this back in April, when this market was in the early stages and inventory levels were at all-time lows. Even then, you had to have the right buyer to make it to closing. However, now that we’re starting to see this extremely competitive market starting to slow down, pricing your home correctly may be more important than ever before. In fact, starting too high might result in a lower sales price; let’s talk about why.
For the past several months, buyers have gotten used to the list price being just the starting point. In fact, most would believe to even have a chance at winning in a multiple offer situation, you’d have be at a minimum of $20,000 or more over the list price. This is the beginning of where a homeowner can get into trouble by starting too high.
With enough homes selling at these new all-time high sales prices, comps now support higher list prices (in some neighborhoods more than $100,000 more than they would have just back in February). This means that homes are hitting the market at higher prices, and buyers still have the idea that in order to compete they must be willing to pay $20,000 or more over these higher prices. If you start the list price too high, buyers are simply deciding it’s not worth that higher amount over list. Because they believe in order to compete, they must be over list, they choose to walk away instead of making an offer, even at list price.
The problem is, the buyer’s mindset changes almost instantly in this market once a home sits on the market for more than one weekend. Once it’s learned the property did not go under contract after the first weekend, like every other home they had interest in, they instantly think it’s overpriced, and they can get it at or even below list. This now causes the home to sell for less than list price.
However, in the event that that same home was listed, say even $20,000 less, the story could be completely different. In this event, you could get more buyers through the doors to see your home and buyers willing to pay that $20,000 over list. This causes offers to start rolling in. If there is one thing you can count on with human nature, it is the Fear of Missing Out or FOMO. As soon as a buyer learns there are multiple offers, they naturally want the home even more, causing their $20,000 over list offer to turn into $30,000 or $40,000 or more over list price. Now, the home is selling for a higher amount than if they started it at the $20,000 higher price point. This is simply because buyers were willing to pay that higher price point but believed they’d have to pay more due to the current market conditions.
One of the biggest ways TK Homes helps their home sellers make the most money at closing is by taking the time needed to price a home accordingly. Starting the home at the right price is a science, and it shouldn’t be done by just anyone. Let TK Homes carefully study your home’s unique characteristics, the neighborhood, and those buying homes like yours to determine the right starting price point to net you the most amount of money at the closing table. It is this extreme attention to details when pricing that has allowed our clients to average 2.9% over list price. On a $500,000 home, that’s an extra $14,500 that you can take all the way to the bank!
So, if you’re thinking about selling your home, let’s chat about how we can put more money in your bank account. If you just want to get an idea of how much your home is worth, contact us for a FREE Comparative Market Analysis.
~ Written by Team Leader/REALTOR® Trevor Kohlhepp