Be wise, not overly optimistic, about pricing home for sale

Home sellers are pumped.

Fannie Mae’s Home Purchase Sentiment Index, based on a survey early this year of 1,000 consumers, shows a big jump in the belief that this is a good time to sell.

Overall, that’s a very rational judgment. The median price of an existing home sold in January reached $303,900, a 14.1 percent increase from a year earlier.

And media reports — and neighborhood gossip — have buzzed about bidding wars between multiple buyers.

Why, then, were 52 percent of real estate agents recently surveyed by Homelight reporting that one of their biggest challenges this year would be sellers who want to overprice their home?

“If people overly focus on such stories (about price jumps),” explains Aner Sela, University of Florida consumer psychology expert, “then that can certainly lead them to overvalue their property.”

Sellers would benefit if they didn’t start imagining what they could get before researching available facts, he adds. “If people start with a high-price ‘anchor’ in mind, it can be difficult to sufficiently adjust this perception … even if people know it is probably too high.”

Sellers can interview possible listing agents, who prepare a detailed market analysis, showing prices paid recently on similar homes in the area. When prices are escalating quickly, prices of other current for-sale homes help keep pace.

Agents with plenty of statistics who tell sellers “what they need to know, not what they want to hear,” are likely to price to sell, says Irene Keene of Coldwell Banker Realty in Madison, Connecticut.

Even if an unrealistically high price still lures a buyer, they would need to pay cash, since a lender won’t finance a property that doesn’t appraise based on comparable prices, Keene adds.

Sela advises talking not just to agents, but to their past seller clients, to probe how accurate an agent’s pricing and marketing proved to be. “Promise the reference provider that their opinion will remain confidential, and try to speak with two to three unrelated sources,” Sela concludes.