Subject: 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 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.
"Real Service in Real Estate." For a personal consultation on buying or selling real estate, Janis Peterson, GRI, Realtor® can be reached at (610) 642-3744, e-mail: jp4re@pahomes.com. Prudential Fox & Roach Realtors® is an independently owned and operated member of The Prudential Real Estate Affiliates, Inc.
