â€œOne crucial aspect of selling a house is correctly establishing its initial asking price. If a seller prices a house near its fair market value, the house usually sells quickly for top dollar. If, on the other hand, a seller grossly overprices a property, it tends to linger on the marketâ€¦Ironically, instead of getting more moneyâ€¦ [Over-pricing] usually stigmatizes a property and reduces the eventual sale price to less than it would have been with more realistic pricing.â€
– House Selling for Dummies
1. Â The basic truth: the vast majority of serious buyers and their agents simply will not make offers on properties they consider significantly overpriced.
2. Â Overpricing wastes the optimum moment of Buyer/Broker interest in the propertyâ€”when itâ€™s brand new on the market and the marketing plan is in full implementation.
3. Â Sitting on the market, the property becomes â€œstale.â€
- Killing the â€œsense of urgencyâ€ in buyersâ€™ minds that they must act quickly with a strong, clean offer. It is this sense of urgency that typically leads to the highest sales priceâ€”either through a competitive-bidding multiple-offer situation, or the perceived threat of the seller receiving other offers.
- Dramatically reducing the perceived value of the property because buyers assume there must be something wrong with the property. Just as competitive offers enhance value in buyersâ€™ minds, an apparent lack of interest deeply reduces value.
4. Â Overpricing helps sell competitive propertiesâ€”as they stand out as a good value in comparison.
5. Â Overpricing usually results with the property selling for less money than if the property had been properly priced to begin with.
Buying the Listing
In order to win the listing, some agents suggest a list price considerably higher than market conditions and comparable sales justifyâ€”because these agents believe this is what the seller wants to hear.
This is called â€œbuying the listing.â€
Because of the factors mentioned above, this is a huge disservice to their clients. My practice is based upon telling my clients the truth.