If you are planning to put your home on the market in the near future, you’ll obviously want to get the most amount of money for it. You believe your home is unique, so should be worth more than other houses in the neighborhood.
Most sellers tend to ignore the basic science that helps determine a property’s listing price. They tend to overprice their properties. The truth is a list price that is too high will adversely affect your bottom line rather than help it.
Here are five reasons explaining why overpricing your home is a bad idea:
Most buyers rely on CMA
Buyers who hire real estate agents to represent them rely on comparative market analysis (CMA) to determine their maximum offer price. CMA is a study of homes of similar size and condition that were recently sold in a neighborhood. If you overprice, you will miss out on buyers who would potentially pay full market value for your home.
Your home will lose the competitive edge
Since buyers will compare price of several properties in a neighborhood, they will choose those which are priced fairly. You will fall out of competition. Your home will not stand up to the other competing homes.
Your home’s value will depreciate
If you overprice your home, you won’t be able to sell it quickly even in a seller’s market. The longer your home sits on the market, the greater the risk of it’s value depreciating. Overpriced homes will always take longer to sell. This long waiting period will likely allow the actual market value of your home to fall further and further away from your asking price.
Buyer will feel betrayed
Most buyers finance a home deal with a mortgage. Lenders will require an appraisal. If your home is overpriced, the appraisal will clearly say so. If, by some miracle, you get an accepted offer at your high price, the buyer will feel betrayed after the appraisal.
Overpricing a home to allow for negotiating room is also a tactic that can backfire on sellers. So price your property fairly from the very beginning.