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What
sellers wouldn't want to get as much for their homes as buyers are
willing to pay? The temptation to test the market can be great, but
overpricing, and even accepting a bid at an inflated price, has a
downside.
Overpricing
often leads to diminished interest. This occurs in two ways: First, an overpriced
home generally sits while initial interest fades. Second, real
estate professionals tend not to guide interested buyers to an
overpriced property. These professionals know they would be risking
their credibility and the reputation they worked hard to develop.
Overpricing
attracts the wrong buyers. Buyers will compare your home to homes selling at market
value and walk away disappointed. Most likely, the other homes will
have more amenities or be in better condition. At the same time,
buyers shopping for homes priced in the range of your home's market
value will not be qualified to see your home until you've
dropped the price. By that time, it may be too late.
Overpricing
results in fewer offers. For various reasons, buyers may feel uncomfortable
submitting a low bid when there's a considerable difference between
the market value and selling price.
Overpricing
leads to financing problems. Buyers run the risk of their mortgage lender
backing out or scaling back available financing because an
overpriced house will not appraise for the selling price.
Obviously,
a "price high then drop" strategy is fraught with risk.
When the price finally drops, buyers may reason that something is
wrong with the property and the seller is desperate. Eventually, the
property will sell, but at how much of a loss? While the property
was being marketed, the seller may have had to cover two mortgages,
pay ongoing expenses, and forego any profit from potential
investments.
What
can you do to ensure you're not overpricing your home? Stick to
facts and leave emotion out of the equation. You may want to hire a
real estate appraiser for an objective, unbiased estimate. Then
consult with a real estate professional. According to Blanche Evans,
a writer for Realty Times ["What to Do When a Seller
Wants to Overprice a Home," September 16, 1998], "The real
pros determine the market value based on comparables [comparable
market analysis or CMA] and in-person visits to the competition so
they can see for themselves why homes are selling for certain prices
in the neighborhood." Work with your real estate professional
to create a strategic marketing plan that creates excitement from
the moment your home debuts on the market.
It's
during those first weeks of showing that real estate professionals
will catch the vision and steer qualified buyers your way. So don't
let the temptation to overprice seduce you away from your best
chance of getting a high price, quickly.
If you have questions about this or any other
home buying or selling subject, confer with the real estate
professionals who can help provide you with more detail…
We
can be reached at (310) 265-2130
Prudential California Realty is an independently owned and operated
member
of The Prudential Real Estate Affiliates, Inc., a Prudential
Financial company.
Equal Housing
Opportunity
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