If you overprice your home, it won’t sell quickly, if at all. Simple as that. Many people put their homes high above market value because of some sentimental value they hold, or because they think their house is worth more than it is, or because they are underwater. Some overprice their home because they feel like buyers are going to try to talk them down anyway, so they need to “leave room to negotiate.” However, that thinking is flawed.
In this video, Rita Boswell shares a story that proves how overpricing your home can cost you dearly.
A Cautionary Tale For Sellers
In summary, Rita Boswell had a couple who were interested in buying a specific house. It needed some repairs, but overall, they loved it.
The one problem was that the seller had listed the home at $295,000, which, after looking at similar houses, Rita and her clients concluded was overpriced. They still decided to make an offer at what they thought was a good price, $260,000. The seller made a counter-offer, and the buyers made one back. This continued for a little while until the seller finally accepted $275,000.
This decision shocked Rita as well as the seller’s agent because the seller had previously received offers from other people higher than $275,000. This is just one of the reasons why overpricing your home is a terrible idea.
Why You Shouldn’t Overprice Your Home
Of course, you are free to list your home for any price you choose. However, any good real estate agent will tell you that overpricing will come back to bite you for multiple reasons.
1. It Will Take Much Longer To Sell
On average, a home that is overpriced could take as much as 10x longer to sell than a correctly priced home. Often times, if you have a house that is overpriced, you will entirely remove it from some buyers’ radars due to it being out of their price range, meaning that people willing to make an offer will be few and far between.
Even for the buyers that are still interested, they will most likely want to make a counter-offer. This will lead to longer price negotiations, and it taking so much longer to sell your home than if you had priced it well. The longer your home sits on the market, the more buyers wonder “Why?” This leaves you open to more low-ball offers.
2. You Can Drive Off Buyers
What about the buyers that can still afford your house, though? Well they probably won’t be too interested either. Any decent real estate agent can easily point out an overpriced house and tell their clients to steer clear of it.
Even without an agent, buyers aren’t dumb. They can compare houses in a certain area and find out when a seller is asking way too much for what they’re offering.
3. You Make Less Money
If you learn anything from reading this blog post, let it be that overpricing a house will lead to it selling for less, not more. This happens time and time again with home sellers. They overprice the house in the hopes that someone will make an offer. They want to “leave room for negotiation” and figure “buyers will offer less than asking price no matter what.” But, that’s just not a good strategy. By the time they finish negotiations, the closing price may be well below market value. Despite how it may seem at a glance, overpricing your home will actually lose you money.
Additionally, the longer a home sits on the market, the longer you as the seller are paying the expenses associated with owning the home – mortgage, insurance, maintenance, taxes, etc.
What Can I Do Instead?
Instead of overpricing your home, use these two helpful tips to make sure you get the most money possible from selling your home:
- Use the ‘Auction Effect’. The auction effect is near surefire way to sell your house for as much as possible. The strategy is to price your house slightly below market value. This will cause multiple people to make offers, hopefully sparking a bidding war, which can drive the price much higher.
How To Get The Most Money When Selling Your House
- Prepare your house. Make your home as move-in ready as possible before you list it. Do a deep cleaning before listing your home, and smaller wipe-downs before every showing or open house. This will make your house more appealing to buyers. Make sure there are no stains or messes, no clutter or personal belongings around, and spray a fresh yet neutral scent before showings.
Staging Your Home To Sell: Secrets From The Experts
If you use these strategies, you are almost guaranteed to make more money and sell your home much quicker than if you overprice your home.