Property Management

How Overpricing Can Cost You

By August 19, 2016 February 22nd, 2021 No Comments

It may seem like you are giving yourself a little room to work with, but be careful. You may just be turning off buyers to begin with.

Pricing a home for sale is a difficult task. Every home value falls within a range, and it takes a certain skill to determine the exact value of the property.

If priced competitively from the very beginning, a home will sell at the higher end of the value range. Obviously, the longer it stays, the lower it’ll land in that range.

The Battle Over Price

Homeowners typically have a very limited perspective on the real estate market, especially since their only concern is based on one home: their own.

On the other hand, agents understand their local markets daily. They possess a great understanding of current market conditions because they work with buyers, view homes, and have first-hand experience on what sells.

Agents know that homes that are priced right and show well will sell in good times and bad.

First impressions make or break your home

The market typically responds to a new listing in the first few weeks, so do everything you can to make it attractive to buyers right from the start. Price your home right, and take all of your agent’s advice about cleaning, de-cluttering, painting and prepping, and your home should sell without incident, and for top dollar.

List at the wrong price or with the home not at its best showing condition, and you’ll leave a poor first impression on the market. As time passes, a listing starts to lose its momentum as newer, more competitive homes come up for sale. As the number of days on the market increases, interest in your home decreases, and the listing becomes stale.

Next phase: price reduction

A price reduction eventually occurs after a few weeks or months of inactivity. If the seller doesn’t price the home within closer range of their competition of what the buyer perceives the value to be at the time, the seller has to come down in price. Often, they’ll drop down, but still not enough.

Over time, the home will eventually get into the right price range for the market, and a buyer will jump on the opportunity. But they will probably attack the seller by coming in with an offer far lower than they would have, had the home come onto the market at the right price.

Once sellers lose the momentum of being new on the market, they’re at a disadvantage when it comes time to negotiate.

Risk of the market changing over time

What’s worse is that the overall markets can start to decline over time. A seller may list in March to a healthy market, but their odds of making a top-dollar sale fall as inventory piles up, the economy slows, interest rates rise, or any number of factors come into play.

Come September time, the value range of the home is lower than it was in March. A change in market conditions is a risk a seller takes by pricing it way too high.

Final advice to sellers

If you are serious about selling your home and have a game plan and motivation to move on, take pricing very seriously.

If you and your agent disagree about the price, but not by a lot, it’s worth trying the higher number. But have an upfront plan to reduce the price quickly, and use that price reduction as a marketing activity.

The market will respond positively to a seller who shows they are serious about selling. Here at Suncoast, we take the next step in placing that home on the market when selling isn’t going your way and renting is the desirable option. Get in contact with us when you decide that your best bet is choosing us!