If I had a dollar for every time I heard- “well, I can always go down, but I can’t go up”. Ugh. It makes perfect sense that a Seller wants to obtain every dollar they can for the sale of their home, however overpricing a home has proven, detrimental consequences that many Sellers don’t realize or comprehend until it’s too late.
If a home is priced appropriately for the market (not too high and not too low), a Seller will enjoy a full spectrum of buyers and maybe even multiple offers. If a home is overpriced however, a Seller will fall into a cycle of negative and predictable consequences.
Take heed of these dangers before overpricing your home:
• Sellers who overprice their home tend to have fewer options available when it comes to listing agents. Many agents won’t even take on an overpriced listing because of the time and energy involved.
Other agents might accept an overpriced listing believing they can acquire new Buyer prospects to sell other homes to when they’re unable to sell the overpriced one.
• Buyers who are qualified to buy in the price range of the home’s actual market value will be deterred from viewing overpriced homes. Those qualified Buyers will skip over the home and not even look at it, believing it’s something they cannot afford.
• The higher the home’s Days on Market (DOM), the higher the home’s marketing time and marketing expense, which can add up quickly and result in unnecessary out of pocket expense.
• Overpricing a home will result in fewer showings, which can be extremely stressful to Sellers who may be vulnerable emotionally. I mean- there’s sadly no chance of selling the home if no one wants to see it, right?
• Buyers from a higher price range who view the overpriced home will inevitably notice that the home is missing the amenities of other homes in that same price range.
• There is a stigma attached to overpriced homes for both Buyers and real estate agents. The longer a home is on the market, the more likely a Buyer will be to believe there must be something wrong with it.
Agents will view an overpriced home as one with unreasonable Sellers. They will, in turn, focus their efforts on selling homes that are reasonably priced.
• Sellers of overpriced homes are less likely receive offers because many Buyers will be afraid to ‘offend’ the Seller with their offer. Buyers instead will present offers on and purchase competing homes.
• Imagine saying ‘maybe tomorrow’ over, and over, and over again. Overpricing a home results in wasted time when ultimately- the Seller will be faced with reducing the list price to what it should have been in the first place- maybe weeks or months after the initial list date.
• The longer a property sits on the market, the longer the Seller will need to pay property taxes, utility expense, and incur other expenses such as lawn maintenance or possibly HOA fees. As a Seller, if you’ve already moved out of the home or are paying for 2 properties, you can incur some hefty expense.
• When it’s all over with, Sellers of an overpriced home will receive a lower overall sale price, which will affect the value of future sales in the market too.