The Dangers of Overpricing

The Dangers of Overpricing

Just about every property owner in the world believes that their property is worth more than the current market will bear.  It is a given just about every time a real estate professional or an appraiser determines a range of value. There are risks attached if the seller prices their property over the current market value.

The two greatest risks that can affect a seller are:

• The Property may never sell
• The Seller will not get top dollar

If the owner intends to sell the property and attempt to get “top dollar” there are dangers to intentionally overpricing the property.  The dangers included but are not limited to the following.

• The home may not meet lender qualifications.  It must appraise for the buyer to get a loan.
• It will take longer to sell.  It will be on the market too long and become “shopworn.”
• The property will have fewer showings limiting the market.  Buyers, as well as agents, are wary of overpriced homes.
• The seller may receive very low offers.  Don’t wait for them because they are rare and often insulting.
• The property will help sell the competition.  The buyers will compare it against another property they are intending to purchase.
• The sellers have to weigh the “holding costs” during the longer marketing time.
• Once an agent sees an overpriced listing, they never go back.  Agents don’t want to show properties that are overpriced.
• Sellers end up selling for less than what they would sell for if the property was priced right initially.
• Overpriced listings attract the wrong buyers.  Buyers have certain images of homes in that price range based on what they have seen.
• The sale price reflects motivation and sellers are competing with sellers that HAVE to sell.
• Sellers look greedy by asking more than the competition.
• If the seller were a buyer, he wouldn’t buy an overpriced house.  Just put the shoes on the other feet.
• About 40% of properties sell in the first 30 days if they are priced competitively regardless of the market conditions.
• The impact from lowering the price is minimal and often overlooked.  Therefore, it is highly recommended to list at a competitive price initially.

Comments

[Geordie Romer]

This is a great reminder, especially in a market that is slowing down a little. We went previewing today in Leavenworth. Our comment about the homes we saw today was the same for every single one - "Nothing a $100,000 price change couldn't fix" There is a reason that our inventory here is at such levels - it's not lack of demand, but rather overpriced listings.

[Greg Perry]

Hey Geordie!
Thanks for wandering by. Always good to see you.

The first and best negotiaion these days is with our seller clients.
Greg