The Dangers of Overpricing
October 13th, 2017
Many people choose to take the approach of pricing their home higher than market value to "test the market", but an asking price that is beyond market range can adversly affect the marketing of a property and could lead to a much lower final sale price.
Sellers can expect a burst of activity when their home first goes on the market. The first few weeks of a listing usually see lots of showing activity as potential buyers wish to see the newest inventory on the market. These showings will taper off after a week or two with only new buyers entering the maket coming to see your property.
There are several problems with pricing your home too high to start:
- Overpriced homes will not attract as many people to view the property and will likely miss out on a pool of interested qualified buyers.
- An overpriced home helps accurately priced homes look better by comparison.
- Marketing time is prolonged, and inital momentum is lost.
- Fewer offers (if any) are received.
- If an offer is received above true market value, it may not appraise, and the buyers may not be able to secure a loan.
- The property may eventually sell below market value.
Why could your house eventually sell below market value?
- The longer your house stays on the market, the higher the chance is that it will become a stale listing. Even if you eventually lower your price to market value range, people may assume there is something wrong with it since it hasn't sold.
- When buyers see a high Days on Market number, they feel more empowered to make a "low ball offer".
How should you price your home?
- We will prepare a CMA (Comparative Market Analysis) to determine the estimated market value range for your property. We will then compare the location, condition, and general desirability of your property to others on the market to determine where your price should fall in that range.
- How we determine your final list price will depend on market conditions (is it a buyer's or seller's market?) and your current competition.
What happens if you price your property below market value?
- If you price your house too far below market value, it will undoubtedly sell for less than it is worth.
- If you are in a Seller's market and you price your property just below market value, you could either sell very quickly at asking price, or you could end up in a multiple offer situation and ultimately sell for higher than market value!
- Pricing your property below market value is a risk, but in the right situation it can definitely pay off. We will help you evaluate your options to determine if this is good approach to take.
Ultimately, the decision is yours to make and we want you to feel confident about your decision!
Posted in the category Sellers