Why overpricing your home can be very costly.
You will lose the excitement that a new on the market listing generates: Real estate agents are working with buyers who have seen the homes currently on the market for sale and are waiting for new homes to be listed for sale. Meaning, the most activity(showings) will take place in the first thirty days that your home is on the market. Your home will receive it’s highest offer during this time. After the initial period of being on the market, the only people that will look at your home will be new buyers coming into the real estate market that are looking for homes.
You can lose the most qualified prospects: Prospective home buyers won’t just “make an offer” because they probably won’t ever see your home. They will view the homes for sale that are priced within their price range, knowing that they cannot afford anything that is priced in the higher price ranges.
Overpricing helps sell other, more properly priced homes first: Your home may be used to demonstrate the good value of other properties. Your objective should be to enter the real estate market in a position that will attract prospective buyers, not drive them away. A classic example of this is a buyer looking at a number of homes in a row and the feedback received from the showing of your home was that your home was too small compared to the other homes. This means that the other homes priced similar to yours were larger and a better value.
Your home will become stale on the market: Prospective buyers will wonder why your home has been on the market so long, or if something is wrong with your home, even after you lower the price. You may even have to settle for less than the market value. A home takes on a reputation surprisingly fast, so don’t wear out your welcome on the market.
You will lose a strong negotiating position when your home is on the market for a long time, both financially and mentally: Prospective buyers will not “feel a sense of urgency” to make an offer on an overpriced property, and you may feel compelled to accept less when you finally do get an offer. Getting an offer on your home in the first thirty days on the market allows you to negotiate from a position of strength, getting an offer on day one hundred and forty on the market… not so much.
If you do get an offer, the contract may “fall thru” because of appraisal issues: The contract sale price must be justified to the lender through the process of the home being appraised. The buyer’s lender hires a third party (the licensed appraiser) to determine the market value of the home at the time of sale. If the appraisal does not “come in” at or above the contract sale price, the sale cannot proceed without an adjustment being made. The list price and sale price of your home, when listed for sale, must be justified with market sales data.
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