Why Pricing Right Always Matters
For a variety of reasons, a Seller may fixate on a certain dollar amount that they want for their home (an “Aspirational” or “Wish List” price), as opposed to what their property is worth. Unfortunately, overpricing can be damaging over time for the reasons listed below. The better approach is to set a list price which is at market value, or even slightly under, to obtain the best result.
Prolonged Time on the Market – An overpriced listing gets fewer Buyer views and showings. Buyers are savvy and if a house sits unsold, they will assume something is wrong. In addition, that stigma is tough to overcome and will work against you going forward.
Reduced Buyer Interest & Offers – When price expectations don't match reality, Buyers hesitate and many won’t even tour the home. What follows? Lowball offers or none at all.
Losing Out on Market Value – Real estate is dynamic, and market conditions can shift quickly, which means a home that’s overpriced today may be worth less by the time you adjust. That means you risk selling for below true market value at the time of the listing because of earlier mispricing.
Buyer Skepticism – Agents and Buyers always look at a listing's price to judge its appeal and an overpriced home may make them question the Seller’s intent, their willingness to negotiate, and the overall listing strategy.
How to Price a Home Correctly
The most important thing to remember when pricing your home is that Buyers are not concerned with your current situation or what you would like to receive for your home. Their only goal is to ascertain the true value of the property and negotiate the best deal possible. So, when setting a list price for your home you should concentrate on the following.
Comparative Market Analysis – Always use nearby comparable sales to set a realistic price. Focus less on “active” or “pending” listings because neither one provides final “sold” data.
Talk to Local Experts – Use feedback from your Agent, who should be familiar with your home/area, and use their expertise to help set your initial price. Also, adjust pricing swiftly when needed.
Plan a Strategic Launch – You may consider launching slightly under market value to spark interest which could result multiple offers.
Reassess Often – If there's no interest within a reasonable period, based on your particular market, reassess and determine if it’s time to adjust.
Conclusion
Always do your best to avoid the dangers of overpricing a home by setting smart, data-driven prices. If you understand the consequences of overpricing real estate (from fewer showings to reduced offers, market value erosion, and Buyer skepticism) and aim to price a home correctly from day one, you should have a successful and timely sale.
