Why Overpricing Your House Is Always a Bad Idea

Kevin Guerrero
Published on August 30, 2016

Why Overpricing Your House Is Always a Bad Idea

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Setting your home’s selling price above its actual market value may seem like a great idea…right?

You have room to deal with buyers who like to bargain aggressively. Plus, your agent can comfortably take his or her commission without compromising what you’ll receive from the sale. Sounds like a win-win situation, right?

Well, there’s a little more to it than that. Let’s look a little deeper at the home selling process to better understand why this is not such a great idea.

A well-maintained property, that is priced competitively from the get-go is actually more likely to sell within the higher end of its value range than one that starts out too high. The better priced home will also sell quicker. This sounds counter-intuitive because it seems we are all taught to go high so we have room to negotiate down. Here’s a better strategy … price it right and don’t negotiate down.

 So why? First off, a competitively priced home will attract more buyers. More buyers means more opportunity to get an offer. By overpricing you may have eliminated a number of qualified buyers that would have taken a closer look at your home had it been within their price range. A second advantage of having more buyers look at your home is that you have a greater chance of generating enough competition to create a bidding war among interested buyers.
When it comes to pricing, agents know best. 

Most homeowners may know their home inside and out…but may not have a great idea of how their home compares to other similar homes. A good Realtor looks at dozens of properties a week and has the very best home valuation tools. They are “in” the market day in and day out and really are the best resource for someone looking to price their home correctly. Homeowners may actually over-value their home…just because it’s their home.

There is a common misconception that real estate agents routinely under-price homes to get a quick sale…to pad their statistics or something. A quick sale doesn’t necessarily mean the home was under-priced. Given enough market exposure, a slightly underpriced home quite often generates multiple offers and actually results in a final price above list price in many cases. Most good agents truly are more concerned with making sure that your house is accurately priced according to current market conditions.

Potential buyers usually respond to a listing within a couple of weeks of listing, so making it attractive right from the start (especially when it comes to pricing) increases your chances of having a favorable sale.

As the popular saying goes, “First impressions, last.” The same rings true for your house listing. 

Take advantage of early momentum when you first put up your house for sale. When we have an overpriced listing that doesn’t get any traffic for several weeks it usually ends up with a price reduction after 21-30 days. If there’s no showings after 3 weeks, that’s the market speaking to us…it’s saying “you are over-priced.”

It really is better to attract buyers early. Keeping your home “show ready” is a real burden to home owners. Not to mention the inconvenience of having to leave your home at a moments notice for showings.  Buyers are more likely to make an offer on a listing that’s within a percent or two of their target price. However, if the initial position is outside of that range they may be on to another property before we get around to reducing the price. Gone.
If you have any questions about how we recommend pricing for a home please feel free to leave your contact info in one of the available forms on the page. I’ll be back in touch ASAP. If you’re looking for more tips and information to help make your buying or selling experience easier check out the rest of my real estate blog! Or if you’re interested in a free home valuation then check out the sellers tab at the top of the page. Or check out the links below!
over price your home

 

About the author:  The above post “Why Overpricing Your House Is Always a Bad Idea” was provided by Kevin Guerrero of Keller Williams Clients’ Choice Realty. To find out more about Kevin and Keller Williams check out the ABOUT US page.

To get a complimentary home valuation click HERE.

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