Why is it dangerous to overprice my home?
Sometimes sellers are tempted to test a higher price at first to see if theyll be lucky enough to find an uneducated buyer willing to pay. Unfortunately, experience shows this "Why not?" pricing strategy rarely pays off. Instead, asking the right price from the start avoids the many dangers of overpricing.
The right sales price is based on several factors: size of the house and its special features and amenities, recent home sales, demand for homes in your area and prices of similar homes currently on the market.
Although you may have decorated lovingly or renovated extensively, those improvements may have only a small effect on the market value of your home. In fact, personalized decorating can even slow a sale unless the style has wide appeal.
Here are 8 proven reasons why its dangerous to overprice your home:
- You will miss out on pent-up demand.
Most activity on a listing comes within the first 30 days. An initial high price can discourage buyers causing you to miss out on pent-up demand or tempt them to wait for the price to come down.
- You will reduce buyer pool.
Too high a price will eliminate a whole class of qualified buyers. Many buyers know just how high they can go and dont even look at homes priced above their ceiling.
- You might turn off buyers.
You may experience few or no showings because some prospective buyers who can afford the price wont waste time with an overpriced listing. They know they can get more house for their money elsewhere.
- You could sell the competition.
Overpricing helps sell other, more competitively priced homes first. Your home may be compared to underscore what a good deal another home is.
- You could frustrate prospects.
Prospective buyers who might stretch their best offer can become frustrated when they cant buy the home they want at a fair market value only because an unreasonable seller insists on accepting only a premium price.
- You will frustrate your own timetable.
You could become frustrated, too, when your house fails to sell in a reasonable amount of time, leaving your plans in limbo. Only a price reduction is likely to help sell your house faster and meet your "move out" timetable.
- You will raise doubts about hidden problems.
If your overpriced house stays on the market for a long time, it may eventually be seen as "stale inventory" which can suggest structural or mechanical shortcomings, even after you lower your price.
- You will risk lender rejection.
If you do get a sales contract, the contract may fall through because of a too-low appraisal. The buyer may not be able to borrow enough to proceed with closing.
If you are thinking of selling your house, give us a call or send an e-mail. Well be happy to maximize your return by helping you set the right price.