With home prices booming over the past years, it could be really tempting as a prospective seller to go for the gold (or platinum) and ask for a higher than market price just to see what you could get. But there are several reasons why that’s not such a great idea, no matter what the market conditions may be.
You will put yourself out of your potential buyer’s search range.
- Over 90% of home searches are conducted online. With a few exceptions, the natural tendency for buyers is to search up to their maximum budget, and that’s it. If you price your home too high, potential buyers won’t even see your listing because it will not be within their search results. For example, a person with a maximum budget of $800,000 is not likely to look at a home that costs $825,000. Even if you are willing to negotiate your price down to $800,000 (or less), the buyer has no way of knowing that.
Overpriced listings are readily recognized.
- Buyers who have been looking for a while have a good sense of the market, as do the agents with whom they are working. They’ve seen enough homes to know what’s an appropriate price range. So, assuming that your home isn’t excluded from their search (per item #1), if they do see it, they’re likely to pass on it because they’ll believe you’re aiming too high.
You’ll make your competition look more appealing.
- If you’re priced too far above the market, newer listings can more easily undercut you and gain more foot traffic. For example, if you’re priced at $825,000, the listing one floor below or above you, with the same floor plan and similar features, could come onto the market at $799,000. Even if that’s at the top of the appropriate market range, this price would still look very attractive to prospective buyers because it is so much less than yours.
Your home will sit on the market longer.
- Because people either won’t find your listing or will completely skip over it in their searches if they think it’s overpriced, you will probably get very few showings. Fewer showings means fewer offers which means your home is likely to sit on the market longer.
You may cut into your final sales price.
- If your home sits on the market for too long without any interest, you’ll need to cut the price to garner more interest. But if you wait too long to do so or don’t drop the price significantly enough, it may interfere with your ability to achieve your bottom line. Buyers and agents tend to question properties which have sat on the market for a while – they ask, “What’s wrong with it?” Additionally, when buyers see that a listing has been on the market for a while, they think the seller may be a bit more “desperate” to get rid of the listing. Both of these factors encourage buyers to make lowball offers. If the initial offer comes in quite low, then you may face an uphill battle in getting the final sales price anywhere near your current asking price.
Simply put – the market will always set the price. Buyers know what’s out there and they have a good idea of what it should cost. In order to give yourself the best chance of selling your home quickly, you need to price your home at an appropriate market price. And, of course, I can certainly help with that, if needed!
If you’re thinking of selling your home and would like to get more information about your neighborhood market, feel free to contact me. I’m always happy to help!
Nikki R. Thomas
Licensed Associate Real Estate Broker
The Corcoran Group – Village Office