The real estate market is improving, which is welcome news for home sellers. Escalating prices give home buyers more confidence to buy, which generates more buyers and greater competition. This type of market often leads overpricing, which can be dangerous at any time. Here is what may happen when overpricing your home for sale.
Home Price and Marketing Timeframe
It is a well known fact that list price and marketing timeframe are linked. Overpriced homes can become stagnant for many reasons. First, the higher in price range you go, the fewer the buyers. Furthermore, high priced homes make lower-priced ones appear a better deal. Thus, overpricing basically assists competing listings. Thirdly, potential buyers are more critical as the price increases. Your home must have clear justification for a high price or potential buyers will not have interest.
Listing Time and Selling Price
Another well-known fact is that extended marketing times lead to lower selling prices. Buyers form a negative view of properties that do not sell quickly. They expect that things must be wrong with the house (and not simply that the price was the problem).
Also, as a seller, you will usually lower the price over time. Even if you drop it to where you should have started to begin with, the damage will have already been done. Buyers submitting offers at this stage will often submit lower prices than for a newly listed home. In the end, your property will sell for less because you overpriced.
What may happen when overpricing your home for sale is both time and money. It is that simple. Even if the market is hot and listings are receiving above list price, overpricing has no upside. It is always important to start at the correct price point. This brings about the most interest, increases demand and yields the highest price. Work with an experienced real estate professional who understands the current market and proper pricing strategy to ensure that you do not make the mistake of overpricing your home for sale.