Does the house you’re thinking about buying seemed priced too high? Or maybe you’re planning to sell your house and want to price it high so you have room to come down, you know, to allow for “wiggle room”.
Selling a house is no small chore, it’s actually a huge chore. There are so many different aspects involved in the sale of a house. Do you know the most important part of selling a house? Is it the advertising? Is it pricing it to match the zestimate for your house? Is it having your REALTOR® do an open house? Here’s the real answer…the most important part about selling your house is knowing the current market value so you don’t price it too high. The last thing you want to say is “My REALTOR® overpriced my house”.
Occasionally, houses are intentionally priced low to generate competing offers and increase the purchase price. And, it can work in some instances.
Pricing your home too high, though, is dangerous. Overpriced homes sit on the market, day after day and month after month, until the price is lowered. You start to say, “is my home overpriced?” Your listing becomes stale, buyers assume something is wrong with your house, and they will avoid it. As you continue to lower the price, eventually you will get that buyer who knows they can get a deal on your house. Buyers have no problem with making a lowball offer on an overpriced home. And, you end up selling it for less. Don’t put yourself in that situation!
➡️ How to Know if a House is Overpriced ⬅️
Homes that are Overpriced Take Longer to Sell
Timing is everything. When a house goes on the market, the greatest potential to attract buyers is within the first 30 days. In a seller’s market, the greatest potential to attract buyers is within a mere 7 days! By pricing it high with the intention of dropping the price later, you are completely bypassing your best candidates for buyers. They will look at the OTHER houses for sale that are more accurately priced. Overpriced houses sit on the market for sale. When you finally decide to lower your price, buyers start to wonder what’s wrong with the house and most buyers will completely avoid it, even when there’s nothing wrong with it! What was wrong from the very beginning was the price.
Overpriced Houses Have Few to No Showings
Buyer agents are obligated to do what is best for their clients. Showing overpriced listings does not fall into that category. Buyer agents will undoubtably show properties that are within their buyer’s price range and that meet the current fair market value. And, buyers don’t want to look at houses they think are overpriced. They will wait until the price is reduced. That is, if they haven’t already found a house that is more accurately priced. And if they do decide to look at your house, they will look for things that are “wrong” with it. After all, if it’s still on the market, there must be something wrong with it. Once again, what was wrong from the very beginning was the price.
Lots of Saves on Zillow But No Showings
Home sellers will sometimes ask “Why is my house not getting showings?” They keep an eye on the number of saves on Zillow, and get excited, thinking there are plenty of buyers out there who are interested in their house. Many times, the saves are not truly interested buyers. Some of the saves are from people who are being nosy and keeping an eye on the status of the house (neighbors and family members will do this). Other times, the saves are from people who would like to buy the house, but then find out they can not qualify for it. And finally, some saves are from truly interested buyers who think the list price is too high. So they save it and wait to see if the price gets lowered.
Overpriced Homes Help Sell the Other Houses for Sale
When a house is overpriced, it not only sits on the market, but acts as a selling point for the houses that are priced correctly. Buyers will say, “I can get the same house for less. Why would I want to buy your house that is listed for more?”
Overpriced Housing Might Not Appraise
If a house is overpriced, and a buyer is willing to pay that price, these are big risks because the house still has to appraise. Overpriced houses typically appraise for less, and you’ll be forced to either lower the price anyway, or put your house back up for sale after the buyer goes to find another house.
You’ll Make Less Money when Real Estate is Overpriced
When a house starts out overpriced, it almost always ends up selling for less than market value. With few buyers to choose from, no leverage because of the amount of time it’s been for sale, too high a list price, and the continued costs to maintain your house while it’s been for sale (you will still have utility bills and other household expenses to pay while your house lingers on the market), most sellers end up getting the least least amount of money rather than the most.
2 Things Buyers Ask When Choosing a House to Buy
- What’s the price?
- How long has it been for sale?
If a house has been for sale a while, you can be sure buyers will wonder what’s wrong with it. When the seller finally lowers the price, some buyers will finally make an appointment to see it. If one of the buyers likes the house, they will make an offer based on how long it’s been for sale. AND, it will end up selling it for LESS than if it had been priced correctly from the beginning.
How to Sell an Overpriced House
If you aren’t getting many showings, or have had showings but no offers, you might be asking “Is my house overpriced?” Buyers choose houses based on the location and price. Then they factor in the condition of the house and how well it will meet their needs. When they look at houses, they always say “Is the price worth it for this house?” When they feel houses are overpriced, they will move on to the next one and take yours off their list. The only way to sell a house that is sitting on the market, with no offers, is to adjust the price so it’s more competitive.
If you find yourself asking “Did I price my house too low” have no fear. Sometimes houses are intentionally priced lower than market value to get them sold quickly and for the highest price. If works like this: Buyers flock to houses that seem like a good deal. This increases the chances of multiple offers (and buyers competing for the same house). This is how the bidding wars get started, and how some houses end up selling for way more than the list price.
What Does Priced to Sell Mean?
The absolute best advice is to price a house to sell. This means reviewing the comparable homes that have sold. The condition of your house will also be a factor. Does it need updating? Does it need to be painted? Are the appliances old? Are the roof and HVAC system old? Are there things that need to be repaired or replaced? Taking the comparables and your house in general into consideration is the only way to determine the most accurate and realistic value. You want to choose a price that will generate the most interest from buyers, and give you the best chance of selling your home quickly. Either pricing your home accurately or a little less, gives you the BEST chance of selling as quickly as possible.
The bottom line? Trust a REALTOR® when deciding on a list price, we know what we’re doing!
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As a seasoned real estate expert with years of hands-on experience in the industry, I understand the critical factors that influence the successful sale of a property. I've navigated through various market conditions, helping clients make informed decisions about pricing, marketing, and selling their homes. My expertise extends beyond theoretical knowledge—I've witnessed firsthand the impact of accurate pricing on the speed of a sale and the financial outcome for sellers.
Now, let's delve into the key concepts addressed in the provided article:
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Importance of Knowing Current Market Value: The article emphasizes the significance of knowing the current market value when selling a house. Pricing a home too high can lead to extended listing periods, reduced buyer interest, and potentially lower sale prices in the long run.
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Risks of Overpricing: Overpricing a house comes with risks, such as extended time on the market, fewer showings, and the potential for the property to become perceived as flawed. Buyers may hesitate to consider overpriced homes, assuming there's an issue with the property.
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Effect on Buyer Interest and Showings: Overpriced houses tend to have fewer showings, as buyer agents prioritize properties within their clients' price range and perceived fair market value. This lack of interest can lead to prolonged listing periods and, eventually, price reductions.
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Zillow Saves vs. Genuine Interest: The article highlights that high numbers of saves on platforms like Zillow may not necessarily indicate genuine buyer interest. Some saves could be from curious onlookers, neighbors, or individuals who later find out they can't qualify for the property.
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Impact on Other Homes for Sale: Overpriced homes can inadvertently benefit competitively priced properties. Buyers may compare the overpriced property to others listed at a fair market value, choosing the latter for a better deal.
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Appraisal Challenges: If a house is overpriced and a buyer is willing to pay that amount, the property still needs to appraise. Overpriced homes often appraise for less, leading to the need for price adjustments or the risk of the sale falling through.
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Financial Consequences: Starting with an overpriced listing can result in the property selling for less than its market value. Sellers may face financial challenges due to reduced leverage, prolonged time on the market, and ongoing expenses.
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Buyer Concerns: Buyers are likely to inquire about the price and the duration a house has been on the market. A property that has been listed for an extended period may raise concerns, potentially leading to lower offers.
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Selling an Overpriced House: The article suggests that the best way to sell an overpriced house is to adjust the price to make it more competitive. Additionally, intentional underpricing can lead to bidding wars and potentially higher sale prices.
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Pricing Strategy: The recommended approach is to price a house to sell, considering comparable sales, the property's condition, and necessary repairs. This strategy aims to generate interest from buyers and increase the likelihood of a quick sale.
In conclusion, the article provides valuable insights into the consequences of overpricing a house and underscores the importance of accurate pricing in the real estate market. Trusting a knowledgeable REALTOR® for pricing decisions is advocated as a key takeaway.
