Most experts would advise that the best way to increase your odds of a successful sale
is to price your home at fair market value. But, as logical as this advice sounds, for many
sellers it is still tempting to tack a few percentage points on to the price to “ leave room
to negotiate.” To avoid this temptation, let’s take a look at overpricing:
Even if you do find a buyer willing to pay an inflated price, the fact is over 90% of
buyers use some kind of financing to pay for their home purchase. If your home
won’t appraise for the purchase price, the sale will likely fail.
Todays sophisticated home buyers are well educated about the real estate market. If
your home is overpriced, they won’t bother looking at it, let alone make you an offer.
When a new listing hits the market, every agent quickly checks the property out to
see if it’s a good fit for their clients. If your home is branded as “ overpriced ,“
reigniting interest may take drastic measures.
SELLING THE COMPETITION
Overpricing helps your competition. How? You make their lower prices seem like
bargains. Nothing is worse than watching your neighbors put up a sold sign.
The longer your home sits on the market, the more likely it is to become stigmatized
or stale. Have you ever seen a property that seems to be perpetually for sale? Do
you ever wonder what’s wrong with that house?
Buyers who do view your home may negotiate harder because the home has been on the
market for a longer period of time and because it is overpriced compared to the competition.
You will lose a percentage of buyers who are outside of your price point. There are buyers
who are looking in the price range that home the will eventually sell for but don’t see the
home because the price is above their pre-set budget. Most buyers look at 10 to 15 homes
before making a buying decision. Because of this, setting a competitive price relative to
the competition is an essential component to a successful marketing strategy.