The Pitfalls of Overpricing your Home

By
Real Estate Agent with Samsel & Associates 0790808

"Let's just price it a little bit higher so there's room for negotiation," Mrs. Homeowner said.

"You never know!" Mr. Homeowner agreed.

Mrs. Homeowner nodded. "We can always lower the price later!" 

 

When I invest my time and my money into marketing a home, I want it to sell. Simply put, I don't get paid until the keys exchange hands. While the strategy Mr. and Mrs. Homeowner wanted to use is common, it's also a result of being grossly uninformed.

If you overprice your home, there will be no one to negotiate with. Buyers are educated - they can see, with the click of a mouse, all of the homes available in a neighborhood in their price range. And if your home isn't at least average in that pile, they won't even bother to come see it. So if you price your home a little high - even 2 or 3% higher than market value - no one will come to see it and therefore you won't have any buyers to negotiate with. Homes listed for $500,000 attracts buyers who want a $500,000 home, not buyers who want a $450,000 home. Homes listed for $500,000 also compete with the other homes that are offered for $500,000 - if your home is only worth $450,000, it will not compare well.

If you plan to reduce the price later, you're reducing the number of potential buyers that will see the home. Trying out a higher price for a few weeks sounds like a great idea, but experienced real estate professionals know that the longer a home sits on the market, the more buyers think there's "something wrong" and are less likely to make an offer. Take a look at this graph - it's easy to see that showings decreases pretty dramatically after the first week on the market.

 

Homes that are listed above market value will eventually sell if the homeowner reduces the asking price. But, the home will sell below the actual market value because of the perception that hte home is unsellable.

 

 

 

Don't make the mistake of thinking buyers are uneducated. Call us for a free, no obligation Comparative Market Analysis and find out what your home is actually worth!

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~ Wayne & Jean 

Union County, NJ - a great place to live and work!

If you're looking to buy or sell a property in Union County, call us at 908-917-4189 or email TeamZuhl@gmail.com.

 

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All opinions, information and data provided is deemed reliable but is subject to errors and omissions. Not intended to solicit other Brokers' clients. We cooperate with them fully. 

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Re-Blogged 1 time:

Re-Blogged By Re-Blogged At
  1. Debbie Reynolds 12/26/2013 09:55 AM
Topic:
Real Estate Sales and Marketing
Location:
New Jersey Union County
Tags:
equity
home
home value
market value
union county
real estate

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Rainmaker
1,347,514
Wayne and Jean Marie Zuhl
Samsel & Associates - Clark, NJ
The Last Names You'll Ever Need in Real Estate

Thomas - our data comes from our own listings.

Totally agree, Andrew - love the parked car analogy.

To compound things, Jeffrey, an overpriced listing has our sign on it for months. Unsold. Sends a bad message about us.

Completely agree, Adrian - pricing separates the experts from the guessers.

 

Dec 24, 2013 01:04 AM #8
Ambassador
1,550,128
Karen Fiddler, Broker/Owner
Karen Parsons-Fiddler, Broker 949-510-2395 - Mission Viejo, CA
Orange County & Lake Arrowhead, CA (949)510-2395

It's such a tough thing....we are often new to these sellers and we are asking them to lower the offer price from what they "want." They often see us as opportunists instead of trying to help them. 

Dec 24, 2013 01:05 AM #9
Rainmaker
792,350
David Alan Baker Laveen & South Phoenix Realtor
Keller Williams Realty Phoenix - Laveen, AZ
Your local Expert

We will always have these types of sellers, and they just won't listen or see the stats that prove over listing is not the way to go.

Dec 24, 2013 01:31 AM #10
Rainmaker
1,347,514
Wayne and Jean Marie Zuhl
Samsel & Associates - Clark, NJ
The Last Names You'll Ever Need in Real Estate

You're so right, David - and their homes won't sell but they still won't learn.

Karen - because we don't get paid until the home sells, some sellers think we're willing to sell their homes cheap just to get paid. I'd rather get a bigger paycheck myself, wouldn't you?

Dec 24, 2013 01:39 AM #11
Rainer
84,203
David Johnson
Team Real Estate Sprigfield - Springfield, MO
Let My Family Help Your Family

So true and a battle we all have to fight everyday.  I like to be a Selling agent not a Listing agent.

Dec 24, 2013 01:47 AM #12
Rainmaker
1,317,651
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

It is diffcult for seller to understand how crucial the first couple of weeks are.  I don't know how we can better educate them.

Dec 24, 2013 02:49 AM #13
Rainmaker
908,388
Pamela Seley
West Coast Realty Division - Murrieta, CA
Residential Real Estate Agent serving SW RivCo CA

Wayne and Jean, your points are spot on. If a home sits on the market buyers will think there is something wrong with it. It's not worth pricing 2-3% over market value to see if the seller can squeeze out a few more dollars. 

Dec 24, 2013 03:06 AM #14
Rainmaker
661,222
Bill Reddington
Re/max By The Sea - Destin, FL
Destin Florida Real Estate

Most important time in a new listings marketing is the first 30-45 days. Overpricing makes no sense. Period. 

Dec 24, 2013 07:52 AM #15
Rainmaker
2,802,255
Laura Cerrano
Feng Shui Manhattan Long Island - Locust Valley, NY
Certified Feng Shui Expert, Speaker & Researcher

It's what I call the tipping point of "No Way, Jose!" Hahaha! Do not overprice.

 

Happy Holidays,

Laura

Dec 24, 2013 08:28 AM #16
Rainer
103,157
Rosie Moore
Serving Sugar Land, Richmond, Rosenberg, Missouri City - Sugar Land, TX
You hit the nail on the head! Overpriced homes end up selling for less than market value and each month the home sits on the market, the less money the seller makes at closing.
Dec 24, 2013 01:46 PM #17
Rainmaker
1,388,437
Michael Setunsky
Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

Wayne and Jean Marie, I believe taking an overpriced listing is an injustice to the seller. Educating the seller is key. Have a great holiday and Merry Christmas.

Dec 24, 2013 10:27 PM #18
Rainmaker
2,502,964
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

The strategy of coming out top dollar gets a little old...You will get the $$$$ so why not let it happen? How about fair market value? That will get the bidding going

Dec 24, 2013 11:17 PM #19
Rainer
2,750
R O

As agents, if you feel your listing is overpriced, how do you tell your seller that his/her target price is too high? Or do you just embrace the constraints and try to sell the home to your best ability?

Dec 25, 2013 03:49 PM #20
Rainer
96,962
Jeff Fritzson: Frisco Real Estate Pro
Jeff Fritzson Real Estate, Ebby Halliday Realtors - Frisco, TX
Your Success is My Focus!

Among the top mistakes in listing a home is overpricing that house. It minimizes your target market, makes you compete against higher end homes and eventually you end up lowering the price to below what you could have gotten in the first place because your homse has become shopworn. 

Dec 26, 2013 12:53 AM #21
Rainer
91,757
Alex Popovic
Apex CRE - Phoenix, AZ
Alex Popovic Designated Broker Commercial RE

Wayne and Jean,

Great blog, and i'm using the stats and examples you provided when meeting with clients next time on listings.  Happy new year and wishing you all the best

Dec 26, 2013 01:09 AM #22
Rainer
323,694
Jimmy Faulkner
Florida. Homes Realty & Mortgage - Wantagh, NY
The Best Of St. Augustine

Some realtors buy a listing and than regret it later. A seller will always net less when a home stays on the market to long. Buyers wonder what is wrong and seller get nervous.

Dec 26, 2013 01:17 AM #23
Rainer
106,578
Brian DeYoung
Howard Hanna Real Estate Services - Ithaca, NY
Brian DeYoung

Why not just price the 500k house at a million!

Then, they can discount it 100k at a time, and really attract the bargain hunters?

Just kidding.

Dec 26, 2013 12:22 PM #24
Rainer
220,151
Suzanne Otto
Six Twenty Designs - Lansdale, PA
Your Montgomery County PA home stager

Unless your home has some great feature that the others in your neighborhood don't, why would they want to see it?

I know when I go shopping for t-shirts I always look at the expensive stores first, then the reasonably priced ones. (Sarcasm)

Dec 27, 2013 12:01 AM #25
Rainmaker
747,020
Ed & Tracy Oliva
West USA Realty - Arizona - Fountain Hills, AZ
The Oliva Team Arizona Agents

Good Morning and this is some great Info for all in the business,  E    Good luck in 2014,

Dec 27, 2013 12:20 AM #26
Rainmaker
1,391,191
Jeff Jensen
The Federal Savings Bank/Lending in 50 states - Greenwich, CT

Set the price to the market.  The first offer is often the best offer.

Dec 27, 2013 07:27 AM #27
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The Last Names You'll Ever Need in Real Estate
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