“One 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 market. Ironically, instead of getting more money. [Overpricing] usually stigmatizes a property and reduces the eventual sale price to less than it would have been with more realistic pricing.” – House Selling for Dummies.
- The basic truth: the vast majority of serious buyers and their agents simply will not make offers on properties they consider significantly overpriced.
- Overpricing wastes the optimum moment of Buyer/Broker interest in the property—when it’s brand new on the market and the marketing plan is in full implementation.
- Sitting on the market, the property becomes “stale.”
- Killing the “sense of urgency” in buyers’ minds that they must act quickly with a strong, clean offer. It is this sense of urgency that typically leads to the highest sales price—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 buyers’ minds, an apparent lack of interest deeply reduces value.
4. Overpricing helps sell competitive properties—as they stand out as a good value in comparison.
5. Overpricing usually results in 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 justify—because these agents believe this is what the seller wants to hear.
This is called “buying the listing.”
Because of the factors mentioned above, this is a huge disservice to their clients. My practice is based on telling my clients the truth.