The Danger in Over-Pricing Your Home

If you are like most sellers, you want your home to sell for as much as possible. It’s only human nature. Therefore, you may be tempted to list your home for the very highest possible price and hope for the best. But if you are really serious about selling your home, this mindset can result in a long waiting game in which you can end up losing – significantly. Not only will your house eventually sell for less than it is worth if it sells at all; you also will have forfeited your ability to move on with your life within a reasonable timeframe.

Let’s begin by reviewing a meaningful, time-honored truism. Are you aware that your home has the best chance of getting a reasonable offer within the first three to six weeks on market if it is correctly priced to sell from the very beginning? If it isn’t properly priced, you can bet that your home will help similar properties in your neighborhood sell long before yours. Assuming that you do not want your home to promote the sale of all other homes but yours, what should you do?

The first step is to get a competent Realtor^® to visit your home to understand what you believe are its best (and worst) features. Be honest, because buyers’ and especially their Buyer Agents’ eyes will be far more dispassionate and critical than yours. The next step is to have the Realtor show you what similar homes in your area have sold for within the past three (3) months in this changing market (a six-month look back would be more appropriate under level market conditions), how long it has taken them to sell, and how many price “adjustments” were necessary before they did sell. Your Realtor will also point out homes that did not sell, and therefore have become what are known as “expired” or “cancelled” listings.

With all the information that is available to buyers on multiple web sites and the increasingly popular social media sites (Facebook, LinkedIn, Twitter and so forth), buyers are becoming incredibly savvy – and many can instantly spot an overpriced property on their own.  If a buyer is also working with a knowledgeable, reputable Buyer Agent, you can bet that your home will be identified as being overpriced virtually from the moment it is listed. The result is that your home will be overlooked by many potential buyers during the critical “first impression period”. The more it languishes on the market thereafter with a series of price reductions, the less desirable it becomes in buyers’ eyes due to the omnipresent “there must be something wrong with it” syndrome.

Under no circumstances should you choose a real estate agent who agrees to put your home on the market at “your” price without being able to back that price up with the aforementioned market statistics. Beware of agents who don’t know the local market conditions well or – far worse – an agent who will tell you exactly what you want to hear just to get your listing. In my profession, this unscrupulous practice is known as “buying a listing”. Under these circumstances, you can expect to hear shortly thereafter that the market has “suddenly changed”, and that your price must be adjusted at once (downward, of course). And perhaps again, and again.

By way of marked contrast, a more seasoned (and/or more ethical) agent will turn down the opportunity to list your home at an unrealistic price. Why? Because he or she has a reputation to uphold, and will not make an unrealistic promise that nothing short of a miracle will deliver. If he or she also pays out-of-pocket for your marketing materials, an overpriced home is a waste of both time and money. That said, there are also those of you out there (I’ve met you!) who will steadfastly dismiss a seasoned agent’s solid pricing advice. Please move on with my very best wishes. Otherwise, please respect your Realtor for the professional that he or she is – because the vast majority of us are knowledgeable, ethical and hard-working. Any buffoon can be an “order taker”. Is that really what you are looking for in a well-qualified real estate agent? Of course not!

In closing, I would be remiss if I didn’t share that pricing is not the only reason why some homes don’t sell promptly – or at all. And, believe it or not, sometimes pricing is not the reason for failure to sell whatsoever! Therefore, this particular article is intended to be the first in a three-part series. My next article will discuss the importance of properly staging your home to sell, followed by the significant consequences of choosing a good marketing agent as opposed to a mere listing agent. There is a world of difference – stay tuned!