6 Pitfalls of Overpricing your House
When it comes to getting the most money for your house with the lease headaches in the shortest amount of time, nothing can stop that process faster than overpricing your house. In fact, it’s the number one reason houses don’t sell.
As a real estate professional committed to happy clients who are eager to get the most from their investment, sharing this must know information with potential sellers in on the tip of my to-do list.
The National Association of Realtors released a study earlier this month that not only reported an increase in home values of 6% from the same time last year, but it also reported that half of homes were on the market for less than 30 days.
Timing is Everything:
Very often a seller will ask, “We can always come down later – Right?”
Historically when your house goes on the market, the greatest potential for buyer traffic is in the first 30 days. By pricing it high with the intention of dropping the price later, you are completely bypassing your best candidates for buyers.
Showings Shut Out:
Agents have an obligation to do what is best for their clients. Clearly, showing overpriced listings does not fall into that criterion. Agents will choose to show properties that are with in their buyer’s price range and that meet the current Fair Market Value.
Benefits the Competition:
Unfortunately, when a home is overpriced, it not only sits on the market but it acts as a selling point for the market-priced homes. It’s a cue to buyer’s to say, “I can get the same house for less down the street!”
Even if an agent agrees to list your house too high, and even if you were to find a buyer willing to pay more – these are both BIG IFS – today’s lenders are extraordinarily cautious now. They base their loans on accurate appraisals and appraisers must base their price on comparable properties that have sold.
Time on the Market:
Overpriced houses will simply sit on the market. Unfortunately, extended time on the market forces the question in a buyer’s mind of the possible bigger problems looming within the walls of the property. Put yourself in the buyer’s shoes. What’s the first two things a buyer asks their agent when they consider a property? What’s the price and how long has it been on the market?
Unfortunately, when a house starts its listing life overpriced, it almost always sells for less than market value. With few buyers to choose from, zero leverage because of time on the market, too high an asking price, and carrying the cost to maintain the property; most sellers find themselves getting the least from their investment rather than the most.