Overpricing in today’s market can be hazardous to your sale. Here are 7 reason why:
1. You Might Lose Qualified Buyers
That’s because they won’t even look at the home because the price is either out of their affordable range or higher than the maximum price they want to buy in.
2. Buyers Comparison Shop
Buying is a process of elimination by comparing competing homes to each other. So over-pricing helps to sell other homes and the over-priced home only serves to reveal the better value of competing properties. Your listing strategy should be to position your home to attract prospective buyers, not drive or scare them away.
3. Today Lenders are Often Require an Appraisal
The mortgage companies lend on the appraised price or the price paid, whichever is less. So if the appraisal is less, the buyer would have to kick in any shortfall. In most cases, the buyer does not have the extra cash. What’s more the buyer tends to lose confidence in the purchase and walks away from the deal. This make it futile to price a property for more than it's worth.
4. The Property May Become Stale After a Time
Properties left on the market for extended periods can become shopworn and even stigmatized. Prospects may wonder why it has been on the market too long and think there is something wrong with the home, even after you lower your price.
5. A Longer Marketing Time Can Have Negative Consequences
It can affect a lower selling price than would have been otherwise attained. You lose a strong negotiating position when your home is on the market a long time, both financially and mentally! Prospects will not "rush" to make an offer on an overpriced property, and you may feel compelled to accept less when they finally do.
6. Over-pricing Reduces Motivation from Buyer Agents
In today’s world of Buyer Representation, selling salespeople are obligated to give their opinion of a home’s market value as part of the disclosure process. As well, salespeople will not promote an overpriced property because they risk losing their client’s trust. All this makes it less likely the property will be shown.
7. The Selling Price is Simply a Function of Supply and Demand
The buyer ultimately establishes the value of a property. Yet, as a seller, you need a pricing consultation report, prepared by a qualified real estate professional that provides an analysis of facts and figures, available to real estate brokers and salespeople, to help you arrive at a proper pricing position in a competitive marketplace. Resist giving into an agent that gives you a price you want to hear. Most unsold listings usually expire and are taken off the market because of overpricing. Select your agent on his/her ability to help you price your home for best market price based on comparable sales.