The Montreal Real Estate Blog

You started out with a high listing price. It’s been a while since your property is for sale…and no offers.

What could be wrong?

The property is in a hot neighbourhood, so the location is not the problem.

The conditions are great; top-notch with lots of renovations. You even got complemented on the décor and how well maintained it was.

Then why are there no offers?

Could it be the price?

After giving it some thought, you realized that perhaps, the reason why those few visitors never made an offer is because your property might be over the market value.

And you should know what the market value is…

Before listing your property, you checked the MLS for the current listings in your area, compared to similar properties, called an agent to give you a free home evaluation (just to make sure) and got a sheet called the “Comparable Market Analysis” (CMA), then decided what the asking price should be - regardless of what that CMA thingy said about the suggested asking price. Did you not?

Ok.

Now your property is NOT selling. What do you do next?

You drop the price. But, by now it might be a little too late. Your property is old news.

(The Risks of) selling your home above market price.

Let’s say you finally get an accepted offer for your house, from an uninformed buyer.

Like most buyers out there, they will need a mortgage; in these situations the offer to purchase is conditional to mortgage approval. No mortgage, no deal.

When receiving the (signed and final) offer to purchase, the mortgage lender requires an appraisal of the property before they consent to the financing. If the current market conditions and the comparable sales for the last six months do not support your sales price, the banks won’t approve it.

The lender will give their own appraisal to the buyer, and the amount they are willing to lend based on that evaluation. If the buyer is putting 20% down payment, the bank will finance 80%. Not a penny more. Which means: the buyers have to get more money, so they can afford your property.

And your deal falls through.

If the buyer is still interested, you can try to re-negotiate the price or the terms. But if not, your property could go back on the market.

Remember:

The longer a home sits on the market, the harder it is to get a good offer.

Once the offer expires, your property is available for new visits, but by now any informed potential buyer who kept an eye on your property will know there were offers on the table, and if they don’t know they will ask. It is your responsibility (or your listing agent’s) to reveal the reasons why the deal didn’t go through, without disclosing the previous accepted price.

There’s nothing more frustrating than having all the ingredients for a successful sale, (pre-approved buyer, a good inspection report, etc.) and then having the bank refusing to lend the money because the property “Is not worth that amount”

New buyers interested in making an offer will think that since the property has been on the market so long; the owner might be desperate to sell by now, and making a low-ball offer will probably get accepted.

By starting out with a high listing price, you could end up selling for a much lower price.

Here are a few more reasons why you should not overprice your home

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