Everyone wants to get a great deal on buying a house, but some sellers are unrealistically optimistic and price their homes well above market value. Trust your real estate agent’s advice to avoid these common pricing problems.
Gaining a Bad Reputation
Your real estate agent determines your best listing price by analyzing local home sales data. Other agents have access to the same listings. If your house is overpriced, every agent will know it, and most will avoid showing it.
Your agent isn’t immune from your home’s bad reputation: if she knows your home is unlikely to sell at the current price, her focus will turn to clients who are more likely to make a sale (and pay her commission).
Sitting on the Market Too Long
Some houses never seem to sell, making home buyers wonder what’s wrong with the property. Real estate agents often develop a blind spot when it comes to long-term listings.
Why should an agent waste her time and her clients’ time on a home that hasn’t received any offers in months? Maybe this will be the month that your overpriced home finally sells, but savvy home buyers know to stay away from longstanding listings.
Devaluing Your Home
Sitting on the market for too long can actually decrease the final sale price of your home. The National Association of Realtors commissioned a study that found that a home’s sale price correlated to weeks spent on the market.
Homes sold within a month of being listed received about 97% of the asking price, while homes that sat for six months received an average of 90% of the list price. For a home priced at $300,000, that’s a difference of $21,000!
Putting Closings in Jeopardy
Even if you manage to find a buyer willing to overpay for your house, there’s still one major hurdle: the appraisal. Virtually all lenders require an appraisal of the home before loaning the money to the buyer. If the appraiser finds your home significantly overpriced, the buyer won’t receive the loan, meaning you’re back at square one. Worse, the failed sale can scare away any agents and home buyers who might have been interested.
Creating a Desperation Mindset
If you set a high list price for your home, you may become emotionally attached to that number, making it harder to accept a listing price decrease or low-ball offer. Remember that the odds are against selling an overpriced home, and you may lose money if you try to hold out for your dream price. Pricing your home correctly at the start can prevent months of heartache.
Though overpricing is a common pitfall, it’s easy to avoid. Work with your agent to determine a realistic price that’s fair for both you and potential home buyers.