I often hear sellers express a strategy of setting the initial asking price high and then coming down in price if it doesn’t sell. At first look, it makes sense that you would want to start out high to leave room for negotiating. That strategy may work, but keep in mind that the longer a home sits on the market, the less money a seller usually receives.
Dangers in an overpriced listing:
1. The first TEN days are generally when you get the most interest and activity on your home. You will never get a second chance to make a first impression, it’s better to get the most exposure the first time around. In addition if buyers are receiving listings from an Agent through MLS (most are...) pricing your home high "to start out" usually results in buyers DELETING your home as an overpriced home. Once you get around to reducing your price, they will never see the price change update in their listings. You have been deleted!
2. Once a home has been on the market awhile it becomes stale, creating a negative impression. If potential buyers see that a home has been on the market awhile, they will make lower offers.
3. In today's market, serious buyers won't bother to look at homes that are overpriced, because they have too much inventory to choose from.
4. An overpriced house discourages prospective buyers from making offers since the difference between the asking price and market price becomes substantial.
5. Agents avoid showing overpriced houses in order not to lose credibility with their buyers.
6. An overpriced home may fetch an offer at the higher amount. Keep in mind that even if a buyer is willing to over pay for the home, a lender won't be willing to over finance the home.
7. Overpricing helps sell similar homes that are priced lower.
8. Overpricing hurts the overall housing market as qualified buyers lose market interest and decide not to buy.
9. Statistics show that the longer a house is on the market, the less money the seller usually receives. By overpricing your home in the beginning, you could actually end up settling for a lower price than you would have normally received.
10. Eventually, market interest in the overpriced property completely declines. As this stage is reached, the seller becomes desperate and he begins to feel they would sell at any price.
11. You may lose more money paying the mortgage payments, taxes, insurance and maintenance. The net result is that the seller gets much less than they could have if the house was correctly priced in the first place.
Homes sell at a price a buyer is willing to pay and a seller is willing to accept. If a home is priced too low, priced under the competition, the seller typically receives offers closer to asking price and should receive multiple offers to drive up the price to market value. In some cases Agents will list a home BELOW market to solicit multiple offers. So there is little danger in pricing a home too low. The danger lies in pricing it too high.
List at a price that will cause the home to sell.
The property listing data and information set forth herein were provided to MLS Property Information Network, Inc. from third party sources, including sellers, lessors and public records, and were compiled by MLS Property Information Network, Inc. The property listing data and information are for the personal, non-commercial use of consumers having a good faith interest in purchasing or leasing listed properties of the type displayed to them and may not be used for any purpose other than to identify prospective properties which such consumers may have a good faith interest in purchasing or leasing. MLS Property Information Network, Inc. and its subscribers disclaim any and all representations and warranties as to the accuracy of the property listing data and information set forth herein.