The Dangers of Overpricing
With our market shifting to become more balanced, we're still seeing sellers stuck in the past. Gone are the days where you can put anything up on the market and get a sale. Nowadays, pricing is integral to selling your listing. Still, many sellers are resistant to putting their home up at a fair market price. We hope this blog will change your minds!
There is no doubt that next to choosing an agent, pricing your home is the most critical decision that you will make in selling your home. The consequences of overpricing can be devastating. Many homeowners have lost valuable time and home equity by overpricing real estate. In a Buyer's market, you must price your home AT market value. Not a little over but right at the market value. If you price your home UNDER the market value you will achieve a competitive edge over similar listings.
Longer Market Time
Homes priced outside of their value range invariably take much longer to sell. The longer a home sits on the market, the less valuable it becomes from the perspective of those that matter most, homebuyers. Nobody gets excited about a property that has languished on the market for months on end. In fact, the longer a home remains on the market the greater the tendency for buyers to low-ball on the price.
The first few weeks of the listing period usually produce the most showings. If you price your home outside of its value range, the buyers that would be most interested in your home will not see it because it will not meet their price criteria. Buyers shopping in the higher price range will not likely view it because there will be competing properties that are larger, or offer more amenities for the same price. Even if you subsequently lower your asking price, it will be difficult to create the excitement that was lost initially. By pricing your home within its proper value range, you have the opportunity to have your home shown to the greatest number of potential buyers, thereby creating for you, a more competitive environment in which to negotiate a sale.
The average buyer looks at many homes before they find one that’s perfect for them. There is little chance that they will not pick up on the fact that your home is overpriced. Even if they like your home, buyers are not likely to write an offer on a home that is overpriced.
Even if you are fortunate enough to find a buyer that is willing to pay more than market value for your home, you’ll likely face additional, and often-insurmountable problems later on. The largest majority of homebuyers require some kind of financing to purchase real estate. Financial institutions typically require a property appraisal from a certified appraiser before approving a mortgage application. They want to make sure that they are not lending money on a property that has sold too high for the current market. Home sales that occur above market value typically fall apart at this stage.