The High Price of Setting a Listing Price Too High and adjusting later?
Sellers often have an unrealistic idea of how their home should be priced, and want to 'test the market' at a certain price point. What many sellers don't realize, however, is that days on market can negatively impact buyers' perceptions of a home and what they are willing to pay for it.
Sellers will eventually begin considering a price reduction. Perhaps the agent that was hired did not recommend a lower price, the other agents did the one that was not hired despite all the facts and the current market trends and indicators he presented, did the one who got the listing priced it where the seller wanted it or possibly even higher than the seller’s anticipated Value? This is an agent that is willing to start out at your price and will tell you: “if you need to drop the price later, you can do that easily, After all, everyone else does it”. The truth is that you may have just met an agent willing to engage in a questionable sales practice called "buying a listing." He bought the listing by suggesting you might be able to get a higher sales price than the other agents recommended.
On the other hand, Buyers typically focus on new listings so pricing your home at a reasonable and realistic price is key especially when you first list your home for sale. By pricing too high you discourage a number of buyers from even considering to purchase your home. When buyers start looking for property they are usually hoping to find what they want at the lowest possible price. Often they will begin by looking at homes that are less than they will eventually pay. If your listing is well above their range it will be eliminated. Will buyers come back to a listing after seeing it at a higher list price? Some will, but many of them will have found homes already!
Contrary to popular opinion, the listing agent does not usually attempt to sell your home to a homebuyer. That isn't how it usually works! Listing agents dramatically increase the sales force by marketing and promoting your home to other agents who do work with homebuyers. During the first couple of weeks of marketing, your home should be a flurry of activity with buyer's agents coming to preview your home so they can sell it to their clients. If you and your agent have overpriced, you’ll have fewer previews and showings. After all, Real Estate Professionals know the market conditions and home values. If your house is dramatically above market, why waste time?
I can't tell you how often I have heard a buyer say, "Well, it has been on the market for a long time, so they will probably be happy with less". Potential buyers will think you might be getting desperate, so they will make lower offers. By overpricing your home in the beginning, you could actually end up settling for a lower price than you would have normally received. What you’ll end up having more of is more stress and longer time on the market and not in the market.
- My Strategy that Sells your Home at ”Highest Possible Price”
- My No Extra Charge ”Short Sale Services”
- My ”Special Saving” for Qualified Buyers of New Homes
A video by Jay Papasan, "Why Some Houses Sit While Others Sell" visually demonstrates why it is so vital to price your house correctly.