Homeowners use a variety of reasons to justify pricing their home higher than the market will bear. Some hope they’ll get lucky and find a buyer that loves their home enough to pay the inflated price. Others believe leaving a lot of room for negotiation will net a higher price. And quite often, some set the price based on financial need rather than reality.
Unfortunately, an overpriced home is easy to spot. Buyers are savvy researchers. And if represented well, their real estate agents won’t be duped on price. Overpricing can result in a longer time on the market with no sale or a drastically lower price than what the home could have received. Take a look at these damaging effects in detail.
Buyers Won’t See Your Home
Buyers and Realtors® use a set price range to search for homes online. If a buyer’s cap price is $245,000, they might enter $200,000 to $250,000 in their search to leave some negotiation room. If the market value of your home is $250,000 and you’ve priced it at $275,000, this buyer won’t even see your home in their search results. And buyers searching in the $250,000 to $300,000 range will notice that homes correctly priced in this range have more to offer in size, upgrades, type of neighborhood, etc. If they can get more for their money in other homes, they’re less likely to give yours a chance.
Wasted Time Gives Your Home a Bad Rap
Time is not your friend in real estate. Buyers want to see the most recent homes on the market because they know the best ones go fast. An overpriced home sits on the market for months or longer and gets fewer showings. Eventually you’ll drop your price several times to find a point where someone will make an offer. Many months on the market can make your home seem stale or unwanted. People will ask, “what’s wrong with that house?”
You’ll Sell for a Lower Price
The ultimate damaging effect is a lower price than you could have obtained had you priced right at the start. If you take your time adjusting down to the price you should have started with, now buyers are less willing to accept that price. You’ll receive more low-balls. Why? Because they have all the information on how many times you’ve dropped your price and how long your house has been on the market. They view themselves as having the upper hand and they want a “steal,” or at least a really good deal.
Price it Right the First Time or Course-Correct Quickly
Realtors® have seen it happen time and time again. Overpricing hurts the final sale of a home. Heed the warnings. Homes that are priced right for their market and condition sell the fastest, whether they’re in the low $100,000s or the high $400,000s. If by chance you’ve overpriced your home at the start, course-correct within a few of weeks of being on the market. A quick correction is much more likely to garner a faster and higher sale than waiting a long time before dropping the price.