The following is adapted from a blog by Amy Harris.
Almost every seller goes into the process of listing their home thinking it will sell for more than what the market stats show. In general, this is because the seller does not take “the psychology of selling a home” into account. We all like to believe that the blood, sweat and tears we have put in, and the memories we have made, will translate to dollars when we list it. But they actually don’t.
credit Amy Harris
Our labors of love will only be perceived as added value if they match the buyer’s exact tastes. Most often this is not the case. Buyers also have little value for your treasured memories and, in fact, the less they know about them the better. That’s why when we stage a home we remove all sentimental items and pictures. Instead, today’s buyers are lured most by is price/value relationship. They want to feel like the house has good value now and will increase later when they want to sell it.
There is a great example of buyer psychology with a recent sale in South Orange. It was listed by four different Realtors over a period of a year before it sold. So what exactly is the psychology of the buyer and what made the house finally sell?
credit Amy Harris
Here is the case study: A perfectly charming Tudor style home in the South Mountain neighborhood of South Orange, walking distance to the elementary school and a bit of a longer walk to the train. It has 4 bedrooms, 2 1/2 baths, a 2 car garage and sits on almost 1/3 of an acre.
First Listing – Realtor 1
- May 19, 2014 – listed for $669,900
- May 22, 2014 – increased list price to $699,000.
- Increased the price to $719,000
- No offers
- November 11, 2o14 – listing expires
Second Listing – Realtor 2
- April 27, 2014 – listed for $675,000
- Went under contract in 6 weeks.
- June 30, 2015 – contract falls through
- June 29, 2015 – Listing withdrawn
Third Time Listing – Realtor 3
- July 2, 2015 – listed for $675,000
- August 2015 – lowered the list price to $659,000
- No offers
- September 30, 2015 – withdrew the listing
Fourth and Final Listing
- October 14, 2015 – listed for $659,000
- It was on the market 18 days
- Received multiple offers
- Sold for $680,000 – 3.1% over list price – more than the original list price after adjustment.
What is the psychology here? The buyers felt that in the high $600,000 – low $700,000 range the house needed too much work. In the mid $600,000 range the buyer perceived it to be a good value, even with putting in the work. The amount of buyer interest organically drove the price to fair market value and the seller made out.
This attests to the old adage “there’s no such thing as under pricing a home.” It’s so true because a home is a commodity and a commodity’s value is set by the buyer, not the seller.
Amy Harris is a leading real estate agent at one of the top producing offices of Keller Williams nationwide. Specializing in markets along the Midtown Direct train line with a special emphasis on South Orange and Maplewood, she offers her clients true concierge service – from the start through completion of every real estate transaction she takes on. Harris donates a significant portion of the revenue she earns from each transaction to “Give Back Homes” a foundation that helps to build homes for families in need and is a Board of Trustee of The South Orange Maplewood Community Coalition on Race.
