The Hidden Cost of Overpricing your Home in Today's Market
One of the toughest things about selling your home is setting the right asking price. It’s important to find the correct balance though, otherwise you may find yourself dealing with the following disadvantages.
It Creates a Bad First Impression
When selling your home, first impressions matter because new listings generate the most interest. An overpriced home can create a bad first impression even before buyers check out the property. Today, buyers have access to online resources that allow them to run comparables in an area, in order to determine what prices to expect. If your listing sticks out because it’s overpriced compared to neighboring properties, they might decide to give it a miss.
Even if buyers do decide to tour the property, they may notice that there are no features or amenities that justify the price, and move on to something else. Bad first impressions will result in a lack of interest and offers on your home, which leads to the next disadvantage of overpricing.
It Will Spend a Long Time on the Market
The older a listing is, the less appeal it has. When looking at listings that are older than two or three months, most buyers will start wondering what’s wrong with the property. Could it have a major flaw that will cost a lot to repair? Is there something wrong with the neighborhood? Or perhaps the seller is stubborn about dropping the price?
Buying a home can be a long process, and buyers are unlikely to want to make the process even longer by complicating themselves with a home that could, potentially, be problematic.
Buyers Might Not Find Your Listing
When browsing listings, buyers always have a plan: they’re looking for a home in this neighborhood, with this many bedrooms and baths, within this or that price range. Using comparables, they can get an idea of what the average price for their dream home should be.
So if your 3-bedroom home is overpriced compared to other 3-bedroom homes in the area, the search engines will not display it because it’s outside the buyers’ price range. Similarly, if your home has been on the market for several months, it will be swallowed by newer listings.
It Makes Competitors’ Listings More Appealing
If they have to choose between two similar properties, buyers will typically go for the cheaper one. This decision makes sense, especially if your home offers nothing to justify the price difference. As a seller, it may be tempting to keep the high price on the assumption that someone will eventually buy it. In reality, however, your home will only spend a long time on the market, while making other homes in the area seem more affordable.
It Can Lead to Low-Ball Offers
Some homebuyers can use the fact that your property has been on the market for months on end to present you with a low-ball offer. This negotiation tactic can come across as a great solution: your home has been listed for a long time, it’s losing appeal, and it’s unlikely to generate any interest from other buyers at this point.
Why not sell it below the asking price, when you risk not selling it at all? The problem with receiving a low-ball offer, especially if you’re hoping to finally close a sale, is that you risk selling your home for less. This scenario can easily be avoided if you price your home right from the start.
It Will Cause Appraisal Issues
Even if you do find buyers who agree with your price, you’re faced with the next hurdle: appraisal. Lenders will require a property to be appraised before they agree on a loan. And this is where comparables will once more act as a reality check on your asking price. If the market value of your home is below the price buyers are willing to pay, the bank may refuse them the mortgage, leaving you to start over.
It Packs Hidden Costs
The longer a house is on the market, the more it will cost you time and money. Even if you renovated before listing, living on site as you wait for potential buyers will cause signs of wear and tear you’ll need to touch up on. If you’ve decluttered your home and you’re using a storage unit, that’s another monthly cost added. Keeping your house tidy and staged for viewings will also take up your time. Not to mention that market fluctuations can lead to your property devaluating, which can result in making less on the sale compared to what you could have earned half a year ago.
CLIENT SUCCESS STORY
Meet John & Lynn
"We were busting at the seams! The house we were living in was our starter house. It was great when it was just Lynn and I, but when our two kids came along we quickly realized we needed more space!"
John & Lynn had some hurdles to jump - figure out how to sell their house & buy a new construction home at the same time. They also did all of this during the COVID-19 pandemic!
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