It is very important to carefully consider your pricing options when you bring your property on the market.
Reasons & Consequences of Overpricing
The biggest detriment to selling real estate is the all too common problem of overpricing. Anxious sellers often want to know why their property is not selling. The answer is usually one of three things: Location; Lack of Marketing and Exposure; or Price. There may be extenuating circumstances or factors that come in to play, but these are the most common things, with the most common being Price.
Understanding the Factors that influence over pricing:
Why do we all sometimes make the common mistake of asking too much? There are several reasons. Obviously, we want the highest price possible for our home. Following are a few other thoughts:
- Extensive renovations have been done, some of which are hidden costs. (Unfortunately, the full costs of renovations are very rarely recoverable and were done for an owner’s specific enjoyment and use); Sometimes there is a perceived emotional value.
- Some owners expect that their present home should bring them enough money with which to purchase a more expensive home or in a more expensive area;
- Perhaps an owner acquired the property in a higher market.
- The price was based on hearsay or general knowledge, without the benefit of a proper evaluation by a real estate professional.
- Building in bargaining room.
Market value is defined at the price a property will bring if exposed for sale on the open market allowing a reasonable time to find a willing purchaser who buys with the knowledge of all the uses to which it is adapted and for which it is capable of being used.
If a property is properly priced it will do the following:
- Attract a greater number of potential buyers.
- Increase your chances for a quicker sale and a better price.
Results of Over Pricing
Missing the Right Buyer
You may think that interested buyers “can always make an offer”, but if the home is overpriced, potential buyers looking in a lower price range will never see it to make that offer.Those who can afford the home at your asking price may recognize that they can get more for their money somewhere else. You may
Those who can afford the home at your asking price may recognize that they can get more for their money somewhere else. You may hear things like “It was too small for them” or “they want a main floor family room.. or an extra bedroom etc.”
What they are really saying is “They expected more for the Price”.
Here is a sequence of events you may expect if your home is overpriced:
- Salespeople who know it is overpriced will show other properties instead;
- Your home will sit on the market, while others sell;
- Prospective buyers, seeing your home on the market for a long time, will begin to feel that there is something wrong with your home.
- You will begin to get anxious and lose patience.
Because of time constraints and obligations, you will then reduce the price to be competitive and sometimes if the market is changing you may “follow the market down”.
- Your property may sell for more than it’s worth because it missed the excitement and became a stale listing. The purchaser was in positions to negotiate more aggressively.
The Role of the Realtor
The Realtor does not determine what your home is worth. Market Conditions, Solds, Competitions, and Trends Determine Value, and then together we determine the price.
Don’t pick the Realtor who promises you the highest price to get you to list with them. Pick the one who knows the market and substantiates the price with facts and experience, like Lakeview Realty Inc. We are here for you! Just Contact Us.