Beware of Overpricing Your Home

The most critical factor in selling your home is not location, not condition, not even the real estate professional you choose to list your house. No, the most critical factor is price.  Making a mistake on price can cost sellers thousands of dollars…not by under pricing the value of the home, but by overpricing it.

Realtors maintain that the optimum time to sell a newly listed property is within the first thirty days. That time frame may be a little longer in today’s market but the concept is the same. There is an excitement generated in both Realtors and buyers when a newly listed property first hits the market. Even an over priced home may get an initial flurry of activity just by virtue of the fact that it is new. But the excitement quickly wanes on an overpriced listing as buyers are educated by what they see in the marketplace.

It is human nature for you to want the highest price for your house. However, there is a common misconception on the part of home sellers that there is no harm done by listing high.  After all, you can always bring the price down if the property doesn’t sell, right? Unfortunately, if you list too high and drop your price later, you cannot recapture that flurry of initial activity brought on by a new listing that is realistically priced. After that important initial marketing period, which can last as long as sixty days, the property can quickly become “old news”.  In addition, new buyers just beginning their home search may start to wonder if there is something wrong with the property and choose to see other homes instead. A listing caught in this situation can take much longer to sell even after a hefty price reduction. The end result is often that the property sells for less money than it would have were it priced correctly in the beginning. 

One reason sellers choose to list high is that they mistakenly believe it is their listing agent who will be marketing the property to prospective buyers. They think that because the listing agent is an aggressive marketer he or she can therefore convince a buyer to pay more money. Although a reasonable position to take, this is not the case. The listing agent’s primary focus is on marketing the property to other agents who specialize in working with buyers. Buyer agents look out for the buyer’s best interests and naturally want to help the buyer obtain the best price and terms for the property. Buyers are therefore kept well informed on house values and trends in the marketplace. Even if you were lucky enough to find an uninformed buyer willing to pay your inflated price, you could likely face an issue with your buyer’s financing. Unless your buyer is paying cash, there will be an appraiser hired by the lender who will determine value based on solid market research. If the sales price cannot be supported by the data, the deal will fall apart.

Experienced Realtors are equipped to analyze current market conditions and give you a realistic range of where your property will sell. Get more than one opinion but avoid listing with an agent who simply tells you what you want to hear. If you are unsure or confused by varying price opinions, consider hiring a certified fee appraiser who does a lot of work with local lenders before you list. It could be the best $350.00 you spend! 

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