The Pit Falls Of Over Pricing Your Home
Listing your home inevitably brings up the question, how do I sell for top dollar and if I price it high what’s the risk?
In this instance I will focus on risk, it's a question I get often and my perspective on pricing around market hype rather than data may not be what you want to hear but if you stick with me long enough to see how it might be true; it might just save you. So, let's get to it...
The reason why you should not overprice a home is quite simple. It won’t sell!
If you're working with a Realtor and that Realtor is taking your direction on pricing the home or is suggesting to price high and "see what happens" you might want to re-consider whom you're working with. At a high-level here is why. Unless there is market data that suggests that is an appropriate pricing strategy you're unlikely to beat the numbers.
If your Realtor is not proficient in convincing you of your homes market value it could be possible that they would also have a hard time convincing someone actually interested in buying it of its worth.
Secondly, rarely in a market place will you see homes going over market value (that doesn't mean over asking) it means over the market and the sum of its parts. So, pricing at an unjustified premium and hoping you will find that one buyer can be catastrophic, let me explain...
Pricing your home at a premium to market – is a sure-fire way to stall the sale. Buyers don’t care that you need X amount for your home, think about it do you care when you go house hunting? All a buyer cares about is paying the fair market value.
If you are not careful you will lose qualified buyers most of which are often working with Realtors, and a great agent can spot an overpriced home from a mile away. These agents will advise their clients to steer clear of your home, protecting you is a large part of what we are paid to do.
Even if you have a longer-term sale horizon it's still possible to price yourself out of the market and if there is a correction you could be finding yourself taking enormous price reductions.
Realtors and buyers search for homes in the same way everyone else does – through google and multiple listing sites.
Essentially you enter in the parameters and the search delivers results that fall into those specifications. So, the more appropriately your home is priced the more qualified buyers it will actually get exposed to which typically translates into a successful sale.
Then you can run into appraisal & mortgaging issues for the sake of example a buyer that is willing to pay what you are asking. They still may need to get money from the bank to pay for it, hard to justify getting a loan for an overpriced home take my word for it, or don’t and ask a mortgage specialist.
Look, I could go on about this all day. The moral of the story on home pricing is understand the market place is typically unforgiving and more often than not rewards those sellers whom do the most research and hire agents that have extensive marketing and sales experience to expose the home so as to capitalize on the upper end of values.
I hope this brought you some value and maybe even changed the way you look at approaching pricing strategies. If you're interested in partnering with me on your next deal, connect with me directly from there we can chat about your needs and see if working together makes sense.
Thanks for the thing that matters most, your attention!
Be great - DB