Is Overpricing Your House a Good Idea?
Pricing your house…
Setting your home’s selling price above its actual market value may seem like a great idea…
You have room to deal with buyers who like to bargain aggressively.
Plus, your agent can comfortably take his or her percentage without compromising what you’ll receive from the sale.
Sounds like a win-win situation, doesn’t it?
Well, the process of property-selling goes deeper than that.
A well-maintained house, marketed correctly and priced competitively from the start, is more likely to sell at the higher end of its value.
It is also expected to get off the market in a relatively shorter period of time as the right buyers get to see it, then compete against each other to secure their new home.
Conversely, an overpriced house is more likely to stay on the market longer than expected.
Because, it simply attracts the wrong buyers who are looking for an even better house.
As well as this, the longer it stays on the market, the lower its final selling price ends up.
This has been observed in homes that typically lingered on the market for more than two months – they tend to sell for significantly less than their initial asking price.
Of course, there are a number of things that contribute to the time a house spends on the market.
Some homes remain on the market for close to 12 months, some even longer.
However, the initial pricing has proven the be one of the most influential factors, in determining the time on market.
Pricing includes the Logical Price as well as the Emotional Price.
When it comes to pricing, some agents know better than others.
As a homeowner, your house is your first and foremost concern.
As such, this could result in you having limited knowledge of the world beyond the borders of your own home – which, in this case, is the real estate industry at large.
If you’ve been following the market, all you usually see is the asking or advertised prices.
You do not get to see what they actually sold for which is often much less than advertised.
It is because of this limited view of the market that some homeowners have a tendency to overvalue their property – they base their expected pricing on a falsehood.
There is a common misconception that real estate agents severely undervalue houses to sell and get them off the market as quickly as possible.
This does not happen very often.
The opposite does happen frequently though. Agents tell sellers a huge price to make them happy and outbid each other to get the listing.
The biggest fibber wins the business!
But that B.S. price never happens…
a) Sellers either spend months chasing the (false) ‘dream’ price or
b) Get knocked down in price a number of times to finally get it sold. At much less, than had the correct price been started with.
While unscrupulous agents do exist, there are those that are actually more concerned with making sure that your house is accurately priced and marketed according to current market conditions.
With this in mind, it’s important to be receptive to your agent’s advice on how to price as well as prep up your home for a sale.
Potential buyers often respond to a new listing within a couple of weeks after posting, so making it attractive right from the start (especially when it comes to pricing) increases your chances of having a favourable sale.
As the popular saying goes, ‘First impressions, last.’ The same rings true for your house listing.
You can take advantage of the early momentum when you first put up your house for sale by getting the price right.
An overpriced listing that stays inactive for weeks often ends up having its price significantly reduced.
It eventually drops until it reaches a price point that is more in tune to what the market perceives its value to be.
Buyers are more likely to strike if the property is around five percent of their desired price.
Remember, buyers often have hundreds of home to choose from. Your home needs to get noticed ahead of the pack.
However, if the house takes too long to go down to its ideal price range. Potential buyers don’t even see it on their radar.
They are not so much disinterested, as they do not even consider it, because the pricing is wrong.
There’s more to it than that of course.
If you have any more questions regarding appropriate pricing, feel free to leave your contact info in one of the available forms on the page.
Or if you need you can reach out to me directly and I’ll be in touch asap.
If you’re looking for more tips tricks and information to help or make your buying or selling experience easier check out the rest of our real estate blog!
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