Reasons why you shouldn’t overprice your home.
May 10, 2007
Because of the constant changes in real estate market conditions, more sellers are competing for fewer buyers. And most buyers are not jumping at the first property they fall in love with.
“The initial asking price is NOT that important because it can always be lowered later.”
Wrong! The original asking price is very important. Specially when working with the new generation of buyers who are well informed on the market conditions. But many homeowners still believe over pricing a listing is the way to go. And they couldn’t be further from the truth. It is a myth. It’s a time wasting myth.
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But most buyers are now looking at prices online, to get an idea of what is for sale and at what prices. Even if they saw your ad for the first time because of another type of advertisement (newspaper, sign in your front yard, flyer, etc) as soon as they decide to make an offer they will make a Market Comparison Search and find out the home is over priced. What would happen next? The homeowner will most likely receive a low ball offer from the buyer.
When the buyer comes with another agent
That buyer’s agent knows the current market and will know of other properties that DOES fit their needs.
Buyer’s agents are not swayed by advertising. They look at their client’s needs; location, condition, and most importantly … PRICE
If your house is overpriced, agents are going to show similar homes that are priced more attractively and as a result, your listing will get passed over.
Agents pay MOST attention to homes newly on the market, and since they new ones are fewer, it is easier to keep an eye out for what is NEW, compared to the vast number of current listings. New listings are on the “hot” sheet circulated in real estate offices. The MLS computer identifies new listings. Your listing agent may hire a service to distribute fliers to all the buyer’s agents. There are office previews and MLS tours to showcase new listings. A lot of attention is focused on what is NEW. With agent’s looking at newly listed homes so aggressively, a properly priced home gets attention.
An overpriced home gets passed over.
You may be thinking, “But I’m willing to negotiate!”
Buyers aren’t thinking in advance about how much you are willing to negotiate. They are comparing your asking price to other asking prices. Plus, when your house is new on the market, you may not be willing to negotiate as much as you will later, once you’ve realized your error.
So what happens if you overprice in the beginning and get more realistic later?
A price reduction later in the listing cycle often gets overlooked. It is just one of many listings, not one of a few new listings. As time passes, you could actually become desperate to sell because perhaps you now really NEED to sell. That is a recipe for receiving lowball offers, so you could end up selling for less than if you had priced the home correctly in the first place.
Agents know this stuff, but many sellers still mistakenly believe they should “price it high” because they can lower the price later, if necessary.
Overpricing a listing is NOT the best strategy.
Absolutely true! I so wish that sellers will understand
Absolutely true! I so wish that sellers will understand this. Overpricing leads to over exposure which leads to much lower offers.
These days, it takes ¨¨Print media Proof¨ like articles and
These days, it takes ¨¨Print media Proof¨ like articles and news, to bring at your listing presentation and show the vendor´s what damage they are doing to their own sale by over pricing.
The problem here in Montreal is that most vendors still think they can ask a high price because the market is still good. Truth is, things are changing…rapidly.
Thanks for visiting!
thanks for giving the valuable information blogger ,
thanks for giving the valuable information blogger ,
How about when an experienced agent listed your home high
How about when an experienced agent listed your home high (according to her advice) and later asked you to lower the price and said she wanted to be more aggressive on the market?
Great article!
Good question, JJ. Sometimes, listing agents/vendors might want to test out
Good question, JJ.
Sometimes, listing agents/vendors might want to test out the market and list a home a little higher than the comparable properties. Why? If your property has better features than the comparables, you can adjust the price to be higher, accordingly.
But, ultimately, it’s the current market ( willing buyers) who will determine if the price is right or not.
If your property was properly advertised (and listed with a competitive price), you should get visitors, and offers.
If the market changed from the time the brokerage contract was signed, prices should be modified to a more accommodate the changes.
The marketing of a home, should always be aggressive.