Why Overpriced Listings Scare Buyers

Why Overpriced Listings Scare Buyers

Your house has been for sale and there has been hardly any interest.  You think you have followed all the rules.  Your property has great curb appeal.  You have made some fantastic upgrades and your home is immaculate looking.  Yet open houses have not attracted many potential buyers and offers are scarce.  

You ask yoursel, "What's the problem?"  There are a number of possible answers involving psychlogical and practical reasoning.  First, you need to examine if your house is priced competitively in your market.  An over priced listing raises a number of questions for the buyer.  

• Does the seller actually want to sell the property?
• Is the seller working with a real estate professional?
• If the seller has not done due diligence in coming up with a listing price, what other aspects of the property have been ignored?

According to the National Association of Realtors(NAR), a seller should receive offers within the first 10 showings of a property. NAR also says if two weeks pass and there have not been any showings, then your property is overpriced.  Buying and selling a home involves making emotional decisions, as well as, financial decisions. Sellers have emotional attachments and place value on the amount of money and work they have put into their home.  The buyer doesn’t place a value on the seller’s history in the house or upgrade the seller has made. Buyers often don’t like the upgrades and would have done them differently and more suited to their tastes.

Educated Buyers

There are numerous tools available for any buyer to make educated and well-thought out decisions when realizing the “American Dream.” In the Internet age, buyers are savvy. They still rely on real estate professionals to help navigate the process, but the Internet has created a new breed of home buyers. There are numerous websites to help buyers research and understand the market’s value. Because they are better informed, buyers are unlikely to walk through a house that is overpriced. At the same time, real estate agents don’t want to show their clients a house that is overpriced. If they did, they would risk their reputation as well as their client’s business and friendship.

Most real estate professionals agree that a property is most marketable and likely to sell when it’s fresh on the market. But sellers often place an unrealistic value on their home. They believe if someone really falls in love with their property the buyer will overpay. The fact is that a home’s value falls within a certain price range no matter how much a potential buyer likes the property.

Sending a Bad Message

A house that is overpriced might tell a buyer that the owner is not serious about selling, that the owner is in no hurry to sell or the owner is ignoring the advice of their real estate agent.

A buyer might forgo making an offer on an overpriced house simply because he doesn’t want to waste time. More likely than not, there will be other properties that are competitively priced in or near the same neighborhood.  Negotiating is an essential element to buying and selling a house, and even though a seller is more than willing to reduce the price during negotiations, many buyers don’t like or are unwilling to “play the game” with a seller, who is asking an exorbitant price.  A seller who has listed a property aggressively high might also be seen as someone the buyer will not want to negotiate with and who is unreasonable.  The buyer will look elsewhere or simply wait for the price to be reduced before making an offer.

Overpricing Repercussions

Trying to sell your overpriced house has more consequences.

When a potential buyer sees a house has been listed for a long period of time, red flags are raised as to why the property has not sold.

·        Is there something wrong with the house?

·        Is it in a less desirable neighborhood?

Buyers might not even look for reasons; they just move on to the next property.  Buyers usually narrow their choices of homes to walk through. That number varies, but what
doesn’t change is that any property that is out of their price range likely will not make the final list of homes to visit. Serious buyers are not going to waste their time and often are in a situation themselves where they must secure a new home as quickly as possible. In the end, owners who overprice their home eventually reduce the price and end up selling, but not before a lengthy bout of anxiety, anger and frustration.  Real estate agents advise sellers to picture themselves as buyers and ask how motivated would they be to view and make an offer on a home that was overpriced.  The answer is clear: they wouldn’t.