The Importance of Not Overpricing Your Home

One of the most important decisions when selling your home, is what price to ask.  Set the price too low and risk losing out.  Set the price too high and, well, lots of things can happen.

 

This may seem obvious but more buyers buy their homes at market value than above.  By setting your price too high, you may miss out on potential buyers shopping at the price your house should be, but below where you’ve chosen to list it.
 
A good rule of thumb is this.   If you have showings, but no offers, your price is likely off by about 5%.  Your property is underwhelming compared to others at the same price.  

If you have a very low number of showings, your price is likely off by 6-12%.  People can tell simply by the listing that your property isn’t comparably priced and, in fact, realtors may be using it to make comparable properties look like a bargain. 

If you have drive by’s but no showings, your price is likely off by a fair bit.

You can always lower the price, right?  Yes you can, but research has shown that a property attracts the most attention when it is first listed.  The longer a property is on the market, the less likely it is to be shown.  Often, buyers assume that something is wrong with the property if it hasn’t sold.

Research has also shown that the longer a property sits on the market, the lower the average selling price.  Buyers may assume that you’re getting anxious to sell and will give you a ‘low ball’ offer.  Therefore the best chance you have to get fair market value is directly related to how new the listing is.

And isn’t it better to sell quickly at a good price?  After all, it’s a challenge to keep a house ship shape and ready to be shown at a moment’s notice.  

A REALTOR® should use comparable homes on the market or sold to steer you towards a fair price.  If a REALTOR® seems eager to list your property higher than market value and doesn’t explain the risks of doing so, be careful!  He or she may be agreeing just to get you to sign, knowing that you will likely have to drop the price later on when the house doesn’t sell.  A reputable REALTOR® knows this isn’t in a seller’s best interest and would counsel against pricing too high.