What Are Some Common Home Pricing Myths & Misconceptions

Home pricing is more than just speculation and market research. Oftentimes, as Realtors we are faced with difficult conversations that reveal uncomfortable realities. Most often, these confrontations involve the seller's asking price. Whatever the reason, whether it be the home itself or the shifting winds of market forces, we sometimes are challenged by our clients to better explain why they may be mistaken when setting a home value. Through surveying our team and speaking with dozens of Champagne & Parisi Realtors, we've learned what some of the most common home pricing myths and misconceptions are, and what you can do to better inform your clients in the future.

Quick Offers Means Your Priced Too Low

This is a great example of the first law of sociology coming into effect: correlation does not equal causation. In simple terms, just because you receive an early offer from a motivated buyer doesn't mean your home is priced too low. The buyer could have a myriad of interests as to why they chose to offer on the home early. They could be of greater means and need to relocate quickly, they could have a specific idea for your specific property (perhaps it's a corner lot, or has space for a pool), or are just offering because your property was available and was a fit for their needs. Sometimes, the price someone pays has less to do with the price on paper and more to do with their needs, circumstances, and ability to pay.

Waiting It Out Will Get You Your Offer Price

Conversely, sitting and waiting is one of the worst ways to "time the market." Timing the market is already a bad practice, but sitting on your hands is the most egregious form of waste. You could skip out on an outstanding opportunity, even if the offer is a few bucks short of your listing price. In our experience, we've seen 'waiting it out' go horribly wrong more often than not. Not only does waiting do nothing to influence the market or change the perception of your home, it could prevent you from pursuing your horizons, namely your next home. 

Pricing High Will Lead You Closer To A Higher Price

There are some who believe that shooting high will land you higher than most, and in some rare cases, this may be true. However, when pricing on the high end of the spectrum, two things are likely to happen: Firstly, your final sale price will likely regress to the average, and secondly, you may miss many eligible buyers who will look sometimes look past the highest-priced homes in a given area. While there is some merit to pricing at the edges of the band, meaning a price closer to the higher or lower end, the curiosity piqued by pricing high on the price band is more likely to turn off more buyers than it is to find the one who buys closer to where you are setting.

Believing Basic Online Valuations

Using a basic online valuation to determine the true worth of your home is like marrying your partner based on their dating profile. While they can provide a cursory overview of your property value, the data gathered by online evaluators on your home is ignorant of so many crucial factors that determine your home value. These include but are not limited to: recent work or damage on the home, contractual contingencies, inclusions such as furniture, dynamic market shifts, and rate changes on pertinent financial products. Not only are these factors absolutely necessary for a clear picture, but they often change much faster than the websites are capable of updating themselves.

A Realtor Is A Realtor... They're All The Same

Is a doctor a doctor? A lawyer a lawyer? Is there a single profession where you can expect the same from every member of that field? There are over 6,000 Realtors in Palm Beach County, and there's a reason Champagne & Parisi is so judicious with its selections and the size of its roster. Volume might earn some extra sales for the largest brokerages in the area, but we believe every Realtor should meet our basic standard of excellence, and bring much more to the table than that. Whether that be bilingualism, niche specialties like waterfront real estate or downtown condos, or something about them that you share, like children, pets, and healthcare needs, a good Realtor is far from "just a Realtor."

You Can Make More By Selling Yourself

FSBO (for sale by owner) sounds novel to many regretful home sellers at the time. After all, why wouldn't cutting out the middleman save money? We like to use the "lawyer" comparison to illustrate the absurdity of going it alone. Suppose you're (hopefully never) in court against the state: the state will bring a prosecutor, maybe even two. Both of these professionals are educated in, immersed in, and practice law every day. It's not just their profession, but their passion. Do you expect to stand up in court, no matter your own understanding of the law? For the same reason, FSBO sellers often lose significant money, thanks to a variety of factors. Your buyer will more than likely bring their own Realtor, whose job is to slice and dice your home until they find every problem to reduce its value for their buyer. It's not malicious, but it's part of the process. A Realtor will help you set up, list, market, and navigate the negotiation process that often involves nuance and principles that nobody outside of a licensed professional Realtor will be versed in enough to succeed.

Assessed Value = Market Value

The best example from the outside world to describe the distinction between "assessed value" and "market value" is the world of modern art. Pieces like Orange, Red, Yellow by Mark Rothco sold for $86.9 million dollars! While it's not our goal to besmirch the reputation of an artist or the tastes of his patrons, a majority would agree that what appears to be an elementary school level of painting should not fetch substantially more than the most expensive home listed in Delray Beach as of today. And yes, there may be a person out there (likely the owner of a mansion such as the aforementioned) who would put a price tag far in excess of a Stone Creek Ranch mansion on a piece of modern art. This long-winded explanation is suffice to say that the "market" may feel differently about the home than the assessment indicates. Remember, an assessment is a strict determination of value, while the market incorporates the attitudes, habits, opinions, and financial liquidity of home buyers shopping in the area. It may not be as drastic as the prices of art, but your home may be valued at much less or much more than an appraiser may conclude.

For more about valuing, pricing, and selling your Delray Beach home - see below...

Why Isn't Your Delray Beach Home Selling? | Why Timing The Market Is A Bad Idea