When Your Selling Price is too High, Beware!
Adapted from RealEstateABC
What Happens Behind the Scenes
If you start out with too high a price on your home, you may have just added to your stress level – and selling a home is stressful enough. There will be a lot of “behind the scenes” action taking place that you don’t know about.
Contrary to popular opinion, the listing agent does not usually attempt to sell your home directly to a homebuyer. That would be inefficient.
Listing agents market and promote your home to the hordes of other local agents who do work with homebuyers, dramatically increasing your personal sales force. During the first couple of weeks your home should be a flurry of activity with buyer’s agents coming to preview your home so they can sell it to their clients.
If the price is right.
If you and your agent have overpriced, fewer agents will preview your home. After all, they are Realtors, and it is their job to know local market conditions and home values. If your house is dramatically above market, why waste time? Their time is better spent previewing homes that are priced realistically.
Dropping Your Price . . . Too Late
If you start out with a high sales price, then drop it later – your house is “old news.” You will never be able to recapture that flurry of initial activity you would have had with a realistic price. Your house could take longer to sell.
Even if you do successfully sell at an above market price to an uninformed buyer, your buyer will need a mortgage. The mortgage lender requires an appraisal. If comparable sales for the last six months and current market conditions do not support your sales price, the house won’t appraise. Your deal falls apart. Of course, you can always attempt to renegotiate the price, but only if the buyer is willing to listen.
Your house could go “back on the market.”
Once your home has fallen out of escrow or sits on the market awhile, it is harder to get a good offer. Potential buyers will think you might be getting desperate, so they will make lower offers. By overpricing your home in the beginning, you could actually end up settling for a lower price than you would have normally received.