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Dangers of overpricing your house

Created date

February 21st, 2014

As a real estate agent, I’ve shown many houses where I’ve asked myself, “How did this seller come up with this price?”

Why do sellers overprice their homes? 

Here’s what I’ve learned:

• The desire to build in “room to negotiate”

• They don’t want to “give away” their home

• The fear of leaving money on the table if they list their house at the lower end of the suggested range

• They overpaid for the house when they originally purchased it

• The need to net a certain amount of money to move forward

Just who determines the value of a house? At the end of the day, the amount a buyer is willing to pay at any given time is what establishes the sale price.

Overpricing pitfalls include:

• Your price helps sell your competition

• Reduced number of showings

• May result in a problem with appraising at full purchase price, thus preventing a buyer from obtaining financing

• Ultimately, overpricing your house will net you less money

Carole Brousseau of Coldwell Banker Residential Brokerage puts it best: “The biggest risk of overpricing is that you miss the ‘A’ buyers who have been seriously looking for a home and may have lost out on one or more homes already. An ‘A’ buyer would more likely be willing to pay top dollar for a home they love for fear of losing out again.”  

This pent-up pool of buyers is the group that will be first to request a showing in the initial weeks. If they can’t see the value in your house, they will more than likely move on to the next new house. 

According to Erica Covelle of Century 21 Commonwealth, “Overpriced homes amass more days on market, leading both buyers and agents to assume something is wrong with the property. This assumption often leads to fewer showings and lowball offers.”   

As my mom always says, “You only have one chance to make a first impression, so make it count!” So be the best home at the best price when you list your house for sale.