If you are serious about selling your home, enter the Zestimate below Loaner

Recently, I came across two very different types of listings for sale on the market.

There are the properties that are on hold in about a week, basically flying off the shelves.

And there are the listings that languish in the market for months with little or no action.

Often the difference is simply the price, not the quality or amenities of the home.

So if you’re serious about selling in today’s real estate market, think down rather than up.

Choose a listed price lower than the Zestimate or Redfin estimate

One of the easiest ways to generate a lot of excitement about your home is to simply price it right.

This usually involves offering it at a lower price rather than a higher price. But what is low and what is high?

Well, your real estate agent should be able to help you with this, but there are some simple clues to understanding this as well.

Most properties come with a Zestimate, which is Zillow’s estimate of a home’s market value.

No, this is not a true home appraisal nor can it be used in place of an appraisal, but it is often a good starting point for determining value.

The same feature can be found on Redfin and is known as Redfin Estimates. Same concept, just different company.

And even Realtor has its so-called “RealEstimate,” which offers three different estimates of home value.

Sometimes these estimates are higher or lower than others. For example, your Zestimate may be lower than your Redfin Estimate. Or vice versa.

Regardless, a good agent will look at comparable sales in the immediate area that have sold recently to determine a good listing price.

They may also tell you to ignore the Zestimate or Redfin estimate and that it’s not accurate, blah blah.

But, and this is a very important detail, will your potential buyer look at recent comps or will they look at the Zestimate? There’s a good chance it’s the latter.

For what? Because they are consumers and these types of estimates are 100% intended for consumers, meaning home buyers. They’re quick and dirty, well-known, and easy to understand.

Exploring actual sales is a more complex process and one that might go over a buyer’s head.

Let’s take an example

I recently came across a property that had been on hold for about nine days. That’s pretty good, considering it’s been a very tough year for the real estate market.

The combination of high mortgage rates (compared to recent years) and ever-rising property prices has put a strain on affordability.

At the same time, a listing in November or December is generally not ideal as there will generally be fewer buyers in the market.

After all, they will be more focused on year-end deals, shopping, vacations, travel, etc. The weather could also play a role.

Despite this, one Southern California property went from listed to pending in nine days.

And if you look at the list price versus the Zestimate and Redfin Estimate, the price was just below that.

This is important because as potential buyers browse listings, they will see these estimates. And it will tell them if the list price is lower or higher than the estimated value.

Human psychology will tell them it’s a good deal if the price is lower than the estimate. Like any other product you purchase, it will be perceived as “on sale” or “discounted.”

No different than a pair of shoes at 20% off, you’ll feel like you’re getting more for less.

Conversely, if a list price is higher than the estimate, that buyer might be put off and feel like the seller is greedy.

This could cause the buyer to move on and consider other properties instead.

Also make sure the price is below key thresholds

In addition to listing below the Zestimate, it can also be helpful to list below a key price threshold.

For example, if the Zestimate is $1,520,000, going with a list price of $1,499,000 accomplishes two things at once.

You get it below the Zestimate and you get it below $1,500,000, which can be a user’s maximum price in their app settings.

This could open up property to more users who could change their settings to only see properties listed for sale under $1,500,000.

If you were to put in $1,505,000, which is still below the Zestimate, some users might miss out on your property, even if it was affordable to them.

Similarly, if the Zestimate is say $520,000, a quote at $499,000 could give the same result.

And if you’re worried that the property will sell for less due to a lower listing price, that may not be the case.

Often, you can generate more interest in your listing if it’s priced lower, and potentially get multiple offers, better terms, etc.

It can actually be riskier to list high, see the property sit on the market, and then be forced to take a price reduction and end up in a similar location.

Why don’t more people do this?

A common complaint from real estate agents is that their client did not listen to their advice on setting the listing price.

In other words, the seller wanted to list it for more than the agent. Go figure, right?

From the agent’s perspective, a lower list price does not result in a much lower commission, as they only earn 2-3% of the sales price. So if it’s $50,000 less, their reduction might only be around $1,000.

But for the seller, every dollar counts. That’s potentially $50,000 less!

However, the situation could be even worse if the property remains on the market for months. As for why sellers list at the top, I suspect they are often potential sellers.

They will sell, but they don’t duty sell. So they will put the property at the high end of the price range and wait and see.

Often this results in a lot of waiting, and ultimately finding that nothing has happened. He is still listed months later with few to no bites.

Of course, they may not care much, because these types of sellers are just testing the waters and aren’t that serious.

Continue reading: It’s good to negotiate with your real estate agent