Buyers Will Reject Your Home Before They Walk In (Here's Why)

Pricing your home is one of the few decisions that can instantly add or destroy tens of thousands of dollars in equity. In this episode, Tim breaks down the 10 biggest pricing mistakes sellers make and explains how buyer psychology, online search behavior, and market data determine what your home is actually worth.

You’ll learn:

• Why pricing based on what you paid for the home is irrelevant to today’s buyers
• The danger of setting your price around what you need to net instead of market reality
• Why relying on a Zestimate or online valuation tool can lead to major pricing errors
• How pricing at $399,000 instead of $400,000 may actually reduce buyer exposure
• The costly mistake of waiting too long to reduce the price
• Why small price cuts often fail to attract new buyers or generate momentum
• How pending sales reveal where the market is heading before closed sales catch up
• Why emotional attachment to a target price can cause sellers to reject strong offers
• The importance of reviewing your agent’s comparative market analysis (CMA) instead of accepting it blindly
• The #1 pricing trap: agents who intentionally overprice your home to win the listing

Bottom line: buyers determine value—not your purchase price, mortgage balance, retirement plans, or an agent’s promises. The sellers who earn the most money are usually the ones who price accurately from the start, react quickly to market feedback, and make decisions based on data rather than emotion.

Intro

Outro

Transcript

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When I see the asking prices of some homes that hit the market, I've got to sit back and wonder exactly what kind of drugs these people were on when they came up with that number. Yes, all of us want the most amount of money for our home. But when you set a price without regard for buying habits or consumer psychology, you are going to leave tens of thousands of dollars on the table. That today I'm going to hit you with some very loving honesty because I want you people in my audience, I want you to do well in all aspects of your life. And these pricing mistakes that people make are just so avoidable. So today we're going to walk through the 10 biggest pricing mistakes guaranteed to cost you big. Number 10, pricing based on what you paid for the house. Now, look, the market does not give a whit about what you paid in 2019. The market doesn't care what you owe. The market only cares what a buyer is willing to write a check for today for the home. So when you anchor the price of your home that you're asking to what you actually paid, well, you are pricing a house that no longer even exists. That time is over. The market has changed, the rates have changed, and the neighborhood probably has changed. So pricing from memory instead of using real current data is how sellers end up with an overpriced home by about 10 or 15%. So just completely disregard your purchase price. And I want you to look only at recently closed sales of homes like yours. Number nine, this is when you price based on what you need to actually clear. And this one gets kind of emotional because when you have a number that you really would love to walk away with, maybe it's the down payment on the next house or the mortgage payoff amount plus all of your moving costs. Uh, maybe it's how much you need to retire. But see, again, the market does not know and does not care about your number that you want. So when you price for your needs instead of the reality of what the market will actually bear, you end up overpricing the home. So it will sit and then you ultimately will clear less than if you had priced it accurately to begin with. Get a seller net sheet from a title company, get your mortgage payoff in writing, and then compare that to what the actual market is really paying. And the best way to solve for any gap there is to change maybe some of your assumptions and maybe downscale what you're doing in the future, but you can't get there by inflating your price and just hoping for a rich fool. Number eight is using your zestimat or any online automated value tool for that matter as the starting point for your pricing. Zillow's own published data shows their estimates are off by a meaningful percentage on most homes and even significantly more on the off-market homes. On a $400,000 home, that error can be, you know, $20,000, $40,000 in either direction, sometimes more. And well, that's just not a pricing tool. That's basically a coin flip with a couple extra steps. The Zestimate and the online tools like it is a marketing tool for Zillow. It does not know about your updated kitchen or your new roof or your neighbor's finished basement. Real comparables and real adjustments and real math is how you price a home. Number seven, this is when you price at a psychological number instead of the search bracket. And this is a little bit in the weeds, but it's important. $399,000 instead of $400,000 is, you know, attractive because, well, $399,000 somehow feels less expensive than the $400,000. But that basically works for things like coffee makers or sham was. It actively hurts you when you're selling a home. And here's why buyers find most of their homes online. So they search in brackets that they set up when they set up their searches. So they're going to search between, let's say, $350,000 to $400,000 or $400,000 to $500,000, whatever it is. When you list at $399 or any of the 99 kind of ending prices, you're going to show up in only one of those two brackets. And that lower bracket is going to be crowded with cheaper homes. But if you list at $400,000 right on the nose, you're going to show up in the lower bracket and the bracket above that. And suddenly you've done two things. Number one, you've doubled the amount of eyeballs that are seeing your home. And also in that upper bracket, your home looks like the bargain in the bunch instead of the you know more expensive one from the lower bracket. And that one adjustment can totally change the quality of buyers who are going to see your listing. Number six, waiting too long to cut the price. And here's what a lot of sellers do wrong. You list at your price, and this is the one you want. So the first week is pretty busy. You have lots of attention. The second week gets quieter. And by week three, you've had one showing and zero offers. Your agent is going to tell you to be patient. Week four, nothing. Week five, nothing. So now you finally cut the price, but it is way, way too late. Look, the best version of this conversation is the one you never really have because well, you took my advice at the beginning of the video and you priced competitively on day one and triggered the bidding war that we always want to pursue. Now, the second best version is you maybe applied some alternative mechanisms before dropping the price. Maybe it was you know offering a rate buy down or the prepaid closing costs and everything else that solves a buyer's monthly payment without touching your list price. But if you're here and you're watching this and your home has been sitting, neither of those have worked for you. And now, well, you have to talk price cuts. So let's talk about how to do it right because doing it wrong is how sellers lose tens of thousands of dollars on top of the mistake that got them here in the first place. So the data on this one is pretty clear. The very best offers come in right after listing. And that's your window. Call it the first seven days. If you don't have any offers by then, you are probably priced wrong. And every day you wait is a day closer to having a stigma of being a still listing put on your home. So I always say cut early, cut hard, and cut once. Don't sit there and dribble out one or two percentage point price drops over three months. That's not going to get anybody's attention. And actually, what it does is it trains buyers to just simply wait around for the next price cut because you've shown that you're going to do that. So just rip off the band-aid, get it done, and the offers are going to come in. Now, really quick, if you find yourself in this position right here, right now, and that's why you're watching this video and you want to talk a little bit further about it. I do consultation calls with my audience members all the time. You can book it at the link in the description below. All right, number five, we touched on this in number six, which is waiting too long to make the price cuts. Number five is when you cut in tiny increments when you finally do make the decision to cut. I know we talked about ripping off the band-aid, but there's not just a time equation here, there's also a quantity equation here. When you finally accept that you are priced wrong, your instinct might be to cut by five or ten thousand dollars because it's well, it's safe and it's small and it doesn't feel too dramatic. And I can understand how this would make perfect sense emotionally. It's the wrong call, though, logically. A small price cut does not get noticed. Buyers do not come flooding back, and agents don't email their clients over a $5,000 or $10,000 price cut. In fact, the algorithm that you're relying on to push this property out there doesn't even reshuffle your listing. All you did was you prove to the market that you're now willing to negotiate down. So the right cut here is going to be dramatic enough to trigger the platform's price drop alerts that are out there. And it's going to be aggressive enough to get your listing in front of a whole new bracket of buyers. So again, if you're at uh a bracket of let's say $425,000 and it's not selling, well, cut it to $400,000 even, and you're now hitting the multiple brackets below and above. Just do it once and make it count. Number four, this is ignoring pending sales and only looking at closed comps. And most sellers look at what has sold in the last six months to set their price. I understand that. That's a great first start. But again, that is only half the picture. The other half is what is actually under contract right now. But because those homes, those are what people are showing interest in right now, and they're going to close at prices that are three to four months newer than your closed comps might be. So in a rising market, pending sales are going to tell you that your prices are heading up. And in a falling market, the pending sales tell you that your closed comps are already scale. But either way, ignoring them means you are pricing to yesterday instead of today. So pull those pending sales and then just reality check your pricing. Number three, letting your emotions set the floor. Look, a seller falls in love with a number, not a data-driven number. It's an emotional number. 500,000 because maybe it's a nice round five, because it's what the neighbors got, because it just feels right. I don't know, but they defend that number against reality. Offers come in at 470, 480, they reject them and the house sits. Well, six months later, they sell for 435,000, which is way less than the first rejected offer. Your feelings that you have as a seller with your home are not a negotiating position that's derived on logic. So if offers cluster below your asking price, this is the market scientifically and data driven, telling you where your home value actually lives. Number two, trusting your agent's CMA without reviewing it yourself. Most CMAs, which are comparable market analysis, is analyses, right? Yeah, let's call it analyses. Anyway, they are rushed and cherry-picked. And that's just the reality of an hour-long listing appointment when the agent wants the contract signed before they leave. So this CMA that they hand you, it might be fine, but it also might be three cherry-picked comps that support whatever price is going to win the listing and makes you happy. But it's not always true. So look at every comp and ask why this one and not that one. Ask about condition adjustments, a lot size, square footage. If the answers feel vague, do your own CMA. It's not hard to do. I did a whole video on it. Just ask me about it and I'll get it to you. But all in, your time for doing this is very inexpensive insurance against a $20,000 to $50,000 pricing mistake. And now here we are at number one. This is letting your agent price it high to win the listing. This is the king of pricing mistakes. Imagine three agents come out to your home. Two tell you that your home is worth $400,000. The third tells you $460,000. Well, who are you going to pick? I mean, almost everybody picks the higher number. The third agent just told you that your home is worth more than what the other said. And well, that feels like good news, but it's not news. It's a tactic. It's called buying the listing. And every experienced agent knows exactly what they are doing here. And if there's agents in the audience watching this right now, the good ones are just totally agreeing with me right now. And the ones who probably buy the listing themselves are going to be in the comments flaming me. Whatever. Here's how it works the home gets listed at 460, but nobody is going to bite. At three, four, five weeks in, the agent is going to say, Hey, we need to make a price adjustment. So you cut your home down to let's say 440. Still nothing. Cut to $420,000. Nothing. Four months later, you sell for $392,000 because now your listing is stale and buyers can smell desperation. They also start to wonder, gee, why hasn't it sold? What's wrong with this house that nobody's buying it? Now, if you ran that against the original $400,000 you would have netted on day one with the right agent who told you the truth, you're looking at a swing of $40,000 to $50,000. And that's not even taking into account all the carrying costs plus the opportunity costs that you could avoid it by selling quick. So when an agent quotes you a number that's noticeably higher than what the others do, I don't want you to see that as good news or as them being some kind of unicorn uh real estate agent. You need to see that as a red flag. And look, pricing is the single most important move that you can make as a seller. And once you have an offer in hand, well, the work is far from over. You see, the short period of time right before closing is when most home sellers lose tens of thousands of dollars or more in sale proceeds to mistakes that are completely avoidable. So I made a video about the 10 closing game mistakes that you need to know about right here. And number one, if you're not careful, can wipe out your entire sale proceeds in about four minutes. We'll see you there.