There have been times during my career in real estate where we were in markets where we put homes on the market for a higher price to “ Test the market” There are times that this strategy is ok and other times when it certainly isn’t worth the risk. We see patterns in real estate in which it is either a buyers market or others when it is clearly a sellers market. Consult your real estate professional to ask them what market your area is currently in .
This post will address the pros and cons of using this strategy regardless of the market conditions.
There is also a huge difference between listing your property for a slightly higher asking price vs. putting your home on the market for a ridiculous price that has no substantial data or closed sales to support the price.
Any of you who know me well know that I will walk away from taking a listing that is absurdly overpriced. To me, it is not fair to the seller to put the home on for an unrealistic price and I also am very careful to keep my reputation in place for pricing and selling homes in Berkshire County for fair market values. For us to take a listing just to get our sign in the yard knowing that the house will not get a single call because of the price is certainly not the right thing to do.
With all of that said, let’s get into the nitty gritty of over pricing your home.
Here is a list of the pros of over pricing your home:
There is a tiny chance that you might just find someone who will buy it.
You may have guessed that there are many more cons to overpricing your home. They are as follows:
Losing critical time on the market as it sits and accumulates DOM ( Days on the market)
Most buyers have buyer’s agents and those agents know the market. They will be able to instantly see that the home is overpriced based on prior sales.
There may be other comparable homes on the market that will sell before yours as they may have similar features but are priced fairly.
As the days accumulate on the market as your home sits unsold, when folks do look at the listing online , it is human nature to wonder “ What’s wrong with this home? Why has it been on the market for so long? “
Our busiest selling time is April-Sept. If you miss the boat on these months, the snow will soon be falling. Get your shovel ready to have your steps cleared for showings and also be prepared to have your driveway plowed and ready every time we have a storm.
Buyer’s agents have access to the “ history” on any current listings. I have seen pricing history such as the following: ( $750,000, $700,000, $650,000……$500,000) What does that say about how accurately the property was priced in the first place??? Yipes
Let’s say we refer back to the one example that I gave in the pros list of : “ Finding someone who will pay your price” If that buyer is financing the property, the bank will eventually send an appraiser over to make sure that the property is priced fairly. The bank certainly will not approve a loan for a home that is not at fair market value. If the appraisal value comes back lower than the offer price, guess what? They may not approve the loan. Now the seller has to face the possibility of having to drop the price to match what the appraiser valued the home for. This may be the only way for the sale to get to the finish line. Not a fun scenario for sure.
As realtors, one of the first things that we are taught and also reminded of any time that we take our continuing ed classes is that : “ Time if of the Essence” When it comes to real estate , this is absolutely true. Why would you want to take the chance of missing out on the perfect buyer for your home? If they skip over seeing your home in lieu of all the others that seem to offer more at a fair price, you can never get that time back.
Can you tell by chance how strongly I feel about this topic? lol
This is why I always offer a free property valuation. Even if you are just wondering what the current value is of your home or need advice on what improvements are worthwhile, I am always happy to offer that service.
Take care everyone and stay safe.
Tanya
“Go for it now. The future is promised to no one.”
Wayne Dyer