The Dangers of Overpricing
“One crucial aspect of selling a house is correctly establishing its initial asking price. If a seller prices a house near its fair market value, the house usually sells quickly for top dollar. If, on the other hand, a seller grossly overprices a property, it tends to linger on the market…Ironically, instead of getting more money… [Over-pricing] usually stigmatizes a property and reduces the eventual sale price to less than it would have been with more realistic pricing.”
– House Selling for Dummies
1. The basic truth: the vast majority of serious buyers and their agents simply will not make offers on properties they consider significantly overpriced.
2. Overpricing wastes the optimum moment of Buyer/Broker interest in the property — when the property is new to the market and the marketing plan is in full swing.
3. Sitting on the market, the property becomes “stale.”
- Don’t kill the “sense of urgency” in buyers’ minds that they must act quickly with a strong, clean offer. It is this sense of urgency that typically leads to the highest sales price, either through a competitive-bidding multiple-offer situation or the perceived threat of the seller receiving other offers.
- Sitting on the market will dramatically reduce the perceived value of the property because buyers assume there must be something wrong with the property. Just as competitive offers enhance value in buyers’ minds, an apparent lack of interest deeply reduces value.
4. Overpricing helps sell competitive properties. An overpriced home makes the comparable properties stand out as better values.
5. Overpricing can result in the property selling for less money than if the property had been properly priced to begin with.
While some agents suggest a list price considerably higher than market conditions and comparable sales justify to simply “buy the listing” by telling the clients what the agent feels the client wants to hear, honesty is always the best choice in marketing a home. Overpricing is a disservice.