Why would sellers deliberately sabotage their chances of selling their homes? It doesn’t make any sense, yet it happens all the time.
Sellers arrogantly slap the highest price on their homes that they think they can get away with. Then they’re surprised when the market slaps them right back with insultingly low offers or none at all.
If you’re a seller getting ready to list your home with a real estate professional, and you’re even thinking of testing the market with a high price tag, it’s time to slap you and get your attention. Here’s what you really set yourself up for:
1. Discourages possible offers – An overpriced home discourages prospective buyers from making offers, if the difference between the asking price and the todays market value is substantial. Many buyers choose not to waste their time on overpriced homes, and prefer to spend their energy looking at homes that appear to be a good value.
2. Lost inquiries and showings – Buyers who learn about the house for sale through signs, flyers or other advertising media will be discouraged with overpriced homes, and will not even inquire about them, nor seek showings. As well, the Buyers agent will concentrate showings based on the stated price-range preferences of the buyers. Just think of your own buying experiences. If you feel you are looking at something that is over priced, you will usually keep looking until you find a better value, and, you will not appreciate or continue to work with a sales agent who keeps recommending overpriced homes to you.
3. Low appraisal versus sale price – Homes that are being financed by buyers must be appraised by the lender. If a home appraises below the buyers offered purchase price, the sale can be endangered… When a home does not appraise, several lenders will penalize the buyer for over paying. It is not unusual for the lender to increase their interest rate, size of the down payment, or deny the loan altogether. This in itself can kill the sale.
4. Helps sell other homes – by overpricing your home you help sell your neighbors house by showing the buyers what a great value “THEIR” home is. This does not help your situation.
5. Lack of showings – Buyers will avoid seeing a home they feel is overpriced.
6. Lower proceeds for seller – it is proven that sellers who chase the market (by overpricing) versus sellers who are more aggressive with their pricing from the get go, end up selling their homes for much less, in the long run. As well, an aggressive sales price moves the home more quickly, thus reducing expensive holding costs.
Overpricing is a risk. Buyers aren’t stupid. Agents don’t work for free. Lenders don’t ignore lending guidelines. So don’t lose out..Don’t overprice your home.