| Why You Need to Resist the Temptation
to Overprice Your Home
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 buyer:
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. |
