Oct 18, 2014

5 Reasons why Overpricing a Home Fails

Every real estate agent knows that if a seller overprices their property, it will take longer to sell and will almost always sell for less money. So why do so many sellers ignore expert advice and overprice their homes anyway?

They’re hoping to defy the laws of economics.
And typically, their excuse is either:

  1. Belief their home is superior to other similar homes.
  2. They feel entitled to make a profit on the purchase, improvements or repairs.
  3. They believe buyers will want to bargain with them.
  4. Rumors of soaring prices or a neighbor's huge sale price.
  5. They want or need the money.
Not one of these justifications has anything to do with the current market value of the property.

Think of your house as a product to be sold - much an item on a store shelf.
The most important factors to consider in pricing are:
  • comparable home sales in your location,
  • condition of your property,
  • current market conditions.

The reasons why overpricing fails are:

1. Often the superior 'amenities' are fairly standard for the area. If recently sold properties in your area have upgrades and special features as well, don’t expect to get an upward adjustment for them. Sorry, you're not that unique. Plus, added features don't add that much to an appraisal. Upgrades and special features to a property do not add more than 10% to the appraised value over other properties in your neighborhood. Repairs and maintenance of your home are not upgrades – buyers expect a maintained property.

2. Buyers don’t care what you paid for your home – it has no significance to the current market value.

3. Overpricing so that you have wiggle room to reduce the price later is not a successful strategy. Your home will likely sit without an offer for months or until you take action to reduce the price. Once you reduce the price, buyers tend to think there's something wrong with the house, sending potential offers even lower. Better to get a full-price offer from a buyer who recognizes that your home is a good buy from the start.&

4. Prices are currently rising across the metroplex – but check what is happening in your neighborhood and price range. Many homeowners want to price based on what another seller is asking down the street or rumors of sales prices. The asking price is not the selling price. Price your property on what the market indicates - based on reality, not wishful thinking.

5. The market will not adjust to what you need or want to get out of your property.
[where: 75230]

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