Why You Should Avoid Overpricing Your Home When You Sell
It may be tempting to overprice your home when you are putting it on the market, hoping for a higher sale price. However, market research has shown that overpriced homes take longer to sell. Plus, overpricing limits the number of potential buyers coming to see the home. Here are the 7 best reasons to avoid asking too much for your home.
Many property sellers believe that overpricing their home will lead to them getting more for the property than it’s worth. So, they will tend to choose an estate agent that offers them the highest valuation.
However, you should be wary of this tactic. Estate agents who overvalue your property usually do this only to secure your business. Not because they believe you can achieve that price.
If you are looking to get a fair (and free!) valuation for your property, click here.
Here are a few of the main reasons why you should avoid overpricing your home:
Overpricing Decreases Buyer Demand
Once you put your property on the market, the first few days are essential. They are the days when the property will get the most attention. And the most viewings.
If your home is overpriced, you may run into two scenarios that can decrease buyer attention and demand.
One is that you will not get any attention or viewings from buyers who know the market price. Or have an agent representing them that does. Another is that you will lose buyers who are using online platforms to search for properties within a fixed budget.
For instance, your home may be worth £230,000 and you decide to list it for £245,000. In this case, you won’t appear in the search results of people filtering properties selling for up to £230,000. And they are the ones you should be targeting.
The Sale Will Take Longer
Because they appeal to fewer buyers, overpriced homes take longer to sell.
As mentioned, the most action you will get for your home is in the first few days. The longer the property sits on the market, the less interest you will see.
This will particularly affect online searches. Most buyers prefer to filter results by date, looking at properties that have just recently gone on the market. The longer your property takes to sell, the lower down it will appear in online search results. This will cause interest to decrease even further. And, it may end up costing you extra because you will need to promote the sale ad to get any attention.
Buyers May Become Suspicious
When a property stays on the market for long, it becomes less appealing to buyers. Buyers always pay attention to when the property was put up for sale. And when they see that it has been for long, they will find this suspicious. They will think there is something wrong with the property that’s keeping it from selling.
On top of that, if you end up having to cut the price, this will show up in the ad and raise even more suspicion. Or cause interested buyers to wait for you to have to make an additional reduction.
You May End Up Accepting a Lowball Offer In the End
Even if you do get attention for your overpriced property, it may not be the attention you want.
Interested buyers who know the market price will most likely offer you a price that is under the market rate. They will do this to attempt a negotiation that will eventually drive the price of the property closer to its market value.
This can take up a lot of time and energy you can better spend elsewhere.
Another scenario is that you find an interested buyer and they decide to carry out a valuation of the property. In this case, the valuation will show that your home is overpriced, and you will end up either having to negotiate or lose the buyer altogether.
You Will Be Exposed to Market Changes
Any real estate transaction is based on current market conditions. It is difficult to make accurate predictions too far ahead. That is why buyers and sellers alike try to make transactions happen as soon as possible.
When you overprice your home, it will take many more weeks to sell. All this time it sits on the market will leave you exposed to unfavourable market changes. And although these changes do not happen too often, there is no telling when the next one will.
If such an event happens, you will be forced to sell your home at a much lower price than you would have if it were closer to the market price from the get-go.
You May Encounter Mortgage Valuation Issues
Many buyers need a mortgage in order to buy a property. In this case, they must obey the conditions imposed by the financing party. All mortgage lenders require buyers to carry out a valuation of the property. Based on this valuation, they decide whether to lend the buyer the money or not.
If your property is overpriced, this will show in the valuation. In this case, you will again be faced with either a negotiation down to the real market price or the loss of a potential buyer.
You’ll End Up with a Sale Listing
Keeping a property on the market for long will also end up costing you.
There is the cost of having your money blocked in a property that is not selling. Which could lead to you losing the property you intended to buy with that money. Plus, other additional costs. Such as keeping the property clean for viewings. And additional marketing endeavours that can keep interest in the property alive.
As tempting as it is, overpricing your home may become an endless list of missed opportunities. For this reason, it’s always best to enlist the help of an experienced estate agent that can offer a fair and proper valuation of your home.