It's How MuCh?!?
All real estate experts agree that the best way to increase your odds of a successful sale is to price your home at fair market rate. However, as logical as this advice sounds, many sellers are still tempted to tack a few percentage points onto the price to "leave room to negotiate". To avoid this temptation, let's take a look at the unintended consequences of overpricing:
1. Appraisal Problems
Even if you do find a buyer willing pay an inflated price, the fact is, most of the buyers use some kind of financing to pay for their home purchase. If your home won't appraise for the purchase price, the sale will likely collapse.
2. No Showings
Today's sophisticated home buyers are well-educated about the real estate market. If your home is overpriced, they won't bother looking at it - let alone make an offer. In fact, statistics indicate that you will receive a higher percentage of your list price if sold within the first 30 of listing your property.
3. Branding Problems
When a new listing hits the market, every agent quickly checks the property out to see if it's a good fit for their clients. If your home is branded as "overpriced", reigniting interest may take drastic measures.
4. Selling the Competition
Overpricing helps your competition! How, you ask? You make their lower prices seem like a bargain. Nothing is worse than watching your neighbors put up a sold sign.
5. Stagnation
The longer your home sits on the market, the more likely it is to become stigmatized or stale. Have you ever seen a property that seems to be perpetually for sale and wonder what's wrong with the house?
6. Tougher Negotiations
Buyers who do view your home may negotiate harder because the home has been on the market for a longer period of time and because it is overpriced compared to its competition.
7. Lost Opportunities
You will the pool of buyers who are outside of your dream price. These are buyers who are looking in the price range that the home will eventually sell for but don't see the home because the price is above their pre-set budget.
Most buyers today will look at 10-15 homes before making a buying decision. Because of this, setting a competitive price relative to the competition is an essential component to a successful marketing strategy!
