Overpricing Your Home
Updated: Mar 16, 2020
According to Ray Martin of Ray Martin Real Estate, people want to get the highest price possible when selling their home and like most humans, sellers often believe their homes to be worth more than the prospective buyers do. A survey by Martin Caselli Real Estate confirms that on average, homes were worth 2% less than homeowners thought.
You lose by overpricing
Homeowners tend to price their homes far above the market average in an effort to make more money. They probably think: my house has all these upgrades and it's the best on the block, however, the popular saying suggest that beauty is in the eye of the buyer and he's more likely going to go with the more affordable priced home.
Buyers may overlook your home
Most buyers have a budget of how much they're willing to spend for their new home if your house is above that, they'll move on to the next house. Internet search engines typically offer search ranges, if your home is priced outside the range, buyers won’t even see it in their search result pages.
Your house may sit for long periods on the market
This usually happens to home sellers who overvalue their houses. Ray Martin says, " Once a house sits on the market for weeks or months, buyers smell desperation,". This makes buyers come in with low-ball offers. You might end up selling way below market value.
Buyers get put off by haggling
A longtime strategy for all types of sellers is to price high and then haggle with the buyer. Homeowners often figure that if they go high enough, they'll get a huge profit. While that tactic may have worked in the past, Martin Caselli Real Estate suggests that buyers no longer have the patience to play the negotiating game. Instead of going back and forth on the price, they’ll stick to their guns. The overpriced home will eventually come down to a price that is fair, if not a bargain.
The Deal Won’t Close
Most people will need a mortgage to buy a home and to get a mortgage, the home in most cases can’t be priced over its market value. Gone are the days when overpricing was easy. That period has taught regulators and lenders to be more stringent about who is allowed to borrow money. Even if a buyer is willing to overpay for a house, the deal may not go through in some cases.
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