Overpricing might seem like a good idea to you because you think that you can strike a bargain, right? Wrong.
It is very likely the exact thing that turns potential buyers away from your property! And that’s not the reaction we’re looking for, now is it? Pricing a home is an art and each home’s value falls within a range. In the end, it will be the buyer and seller who both agree on the price of the house, but that doesn’t help you much at the beginning of the marketing process. A competitive price will sell at the higher end of the value, but the longer it lingers, the lower it will fall.
Here are a few important things to consider how overpricing can cost you dearly:
#1 – The non-stop battle between agent and seller
Many sellers overprice their homes because they tend to have a very limited perspective on the property market.
After all, aren’t they just concerned about one home and that is their own?
Agents, on the other hand, live and breathe property markets on a daily basis, so they have a better understanding (read: objective) of current market conditions.
Sellers often believe that agents just want to price their home at the lowest level possible so that they can make a quick buck!
And, surprise, surprise, that’s exactly where the friction begins!
But in truth agents know how to price homes in the correct way so that your asset is sold as an asset in the end.
#2 – First impressions do make a difference
The market, the market, the market. It all comes down to the market!
The market will provide the most feedback to a new listing in the first few weeks of marketing, so one needs to do everything right from the start!
(1) Price it correctly and you shouldn’t have to worry about getting enough feet traffic through the door! Especially if you followed your real estate agent’s advice when it comes to cleaning, repairing and decluttering your home prior to its marketing.
(2) Price the property above its market value and the slow or non-activity will speak volumes as well. It will lose momentum as other, newer & more market-related property listings pop up and push your property off the potential buyers’ radars!
#3 – Risk of a changing market
Naturally, property markets are continuously in motion as new information arises: perhaps it’s that new highway they’re going to build, an exciting renovation of the local mall, or the arrival of a new school in the neighborhood. Or, maybe there’s the economic or political outlook which might be deteriorating, (re)introduce uncertainty in the property market and result in home buyers dragging their feet. A property might hit the market during a more optimistic time, yet the chances of getting a top price are now at risk when inventory is piling up and properties aren’t selling as quickly anymore!
Yet another great examples of how overpricing can cost you!
#4 – And then there’s the price reduction
After a certain period of relative inactivity, a price reduction is likely the next strategy.
If the seller doesn’t price the home within striking distance of what the buyer perceives as value, the seller will have to come down in price!
Sometimes the price drop is not enough and buyers won’t take them seriously. The home will eventually hit the right spot, but buyers might want to punish the sellers and offer an even lower price than they would have if the home entered the market at the right price.
Unfortunately for the seller, but they will be at a disadvantage when the time comes to negotiate price.
#5 – Always a risk of showing poorly
As time passes, owners might get lazy around their houses and don’t realize that weeds are growing back and that dust bunnies are hopping around underneath their couches. The house won’t show as well as it did when it went on the market. Buyers who do show up when the price is right will then have even more reason to penalize sellers with their (lower) offers.
#6 – Closing advice to sellers
If you are serious about trying to sell your home for the best price, then your pricing should be right the first time around. However, if for whatever reason, the initial marketing price is higher than what the real estate agent suggests, have a Plan B in place to reduce the price quickly and use the reduction as a marketing plan!
A buyer will always be more receptive to a serious seller.