The Denver housing market continues down its wild path of increasing home prices, a severe shortage of available homes, and multiple offers on most properties – several dozen in some cases – that often exceed the sellers’ expectations. But does that mean you can slap any price you want on your home to sell it?
Let’s just try it
I often talk to sellers who want to try pricing their home “way high” just to see “what happens.” That method of determining a listing price for your home is a good way to make sure your home doesn’t sell and will cost you money in the end. Despite what this market often seems to imply, buyers aren’t paying just any price, in their desperation to get into a home, and even if they do decide to make an offer on yours it doesn’t mean they can get a loan for that amount and close the sale.
Underpriced is the way to go
This market is crazy, but it’s incredibly forgiving to underpriced properties. Gone are the days when if you priced your home too low, and you got one offer in three months, you still had to take it when you probably could have sold it for more otherwise.
Now if your home is priced a little below market value you’ll encourage more showings and multiple buyers offering more than asking price.
Buyers will punish you for overpricing
However, the market is incredibly unforgiving where over-priced properties are concerned. Your idea to price your property $20,000 over market value “just see what happens” will fall flat. Buyers are desperate, but they’ve also gotten in the habit of waiting. If it takes three months and 12 offers then they’re willing to wait. They won’t even schedule a showing to see your house much less make an offer.
The market is also unforgiving to homes that sit on the market for more than a couple of weeks. The median home goes under contract in less than a week. While your overpriced home languishes on the market, buyers get suspicious and wonder “what’s wrong with it.” Even if you are willing to lower the asking price after two or three weeks, it has still been on the market for several weeks. It’s likely at that point you’ll have to lower it below the true market value because buyers don’t trust you or the home.
Appraisers will punish you for overpricing
Finally, even if you can convince a buyer to offer you asking price on your overpriced home, that doesn’t mean the appraiser will agree it’s worth that much. And if the appraiser says it’s only worth $x, but you’re still hoping for $y you’re out of luck because the buyer’s lender won’t give them a loan for that amount. You’ll have to convince the buyers to bring additional funds to closing to make up for the appraisal deficit. Or the deal will fall through. If the appraised value and your contract value are that far off the buyers will likely back out of the deal if you refuse to lower the price to the appraised value.
To get as much money as possible for your Denver area home just price it either at or slightly below market value, have a ton of showings, and choose the best offer out of the multiple offers you’ll likely get. That is the easiest and least stressful way to sell your home. Overpricing it to see what happens won’t work in this market.