OVERPRICING & “TESTING THE MARKET”
Are you seduced by overpricing and the “let’s just test the market and see” thinking? Then here are a half-dozen good reasons to change your mind:
No 1: Overpricing hurts you most during the prime time of your listing.
The most excitement your home will ever generate will be during the first few weeks of your listing – when it’s fresh to the market. Will a buyer ever come back if you reduce our price later? Probably not. In
a market with lots of choices, chances are he will have moved on to select another.
No. 2: Overpricing can screen out prospects from your target market.
Almost all buyers are set up on an MLS automatic prospecting alert by their Realtor with a price cap on it.
If you decide to “test the market” and initially price your home high, you’ll never even have the chance to show it to the buyers who are looking in the range of your homes realistic value because it wont even show up on their radar screen.
No 3: Overpricing could cost you your very best prospects.
There’s a 90% chance your home will be sold to a buyer using a real estate agent. Before an agent takes a buyer out looking at properties, the agent pulls up a batch of properties in the buyers price range of which the buyer picks their favorites and the one’s they want to see. Now, suppose your overpriced home – which lacks a garage – falls into a batch with five other well-priced homes that all have garages.
Upon seeing your home, it will only take a matter of minutes for the buyer to reject your property on the basis that they can get more home for the same money.
No. 4: Overpricing doesn’t always correct itself through bargaining.
Over-pricers reason that a prospect who sees their home “can always come in with a lower offer if they like it.” Granted, some people are comfortable with the notion of offering much less that what’s asked for a house that suits their fancy. But many others don’t have the nerve or inclination to bargain with a seller who demands way too much.
No. 5: Overpricing often leads to stale listings.
Realtors know from experience that houses which linger on the market for a long time are generally either in poor condition or, more often, overpriced.
Houses that languish on the market not only inflict carrying costs on their owners, but also breed suspicion among buyers that “something must be seriously wrong with this house or it would have sold sooner.” Ultimately, the penalty paid by the owner of such a house is that he collects a below market price.
No. 6: Overpricing can lead to scratched deals.
In rare cases you may be able to find one naïve buyer foolish enough to fall for your over-market price.
But does that mean you’re home free? Often not.
More than 90% of the homes in the United States are financed through mortgages. And mortgage lenders always demand a professional appraisal that backs up the selling price. If the appraisal comes in low, your deal could well be in jeopardy.