8 Reasons Not to Set a Home Price High
By Laura Agadoni
One goal when you're selling your house is to get as much money as possible. It can be tempting to overprice. There's always a chance you might score big. Right?
One goal when you're selling your house is to get as much money as possible. It can be tempting to overprice. There's always a chance you might score big. Right?
Technically, yes. But that doesn't mean testing the market
by setting your home's price above what the house is worth is a good
strategy. In fact, there are many reasons not to test the market this
way.
1. You won't get offers (but your neighbors might).
It's great to be a good neighbor, but
unintentionally sacrificing your sale to help your neighbors sell their
homes might be going a bit far.
When you price too high, you're "helping sell the other homes in the neighborhood that have listed for less," says Brad Chandler, a Virginia real estate agent.
After seeing your high-priced home,
buyers may be eager to get the better-value house nearby -- even if they
liked your home better.
2. You lose credibility.
Buyers are savvy. They've usually done
the research and have a ballpark idea of what homes in your neighborhood
are worth. When you price too high, people might decide not to even
look at your property.
3. Not everyone likes to play "Let's Make a Deal."
A common reason sellers price high is that it leaves room for negotiation.
The problem with this tactic? If buyers overlook your house because
it's out of their budget, there will be no one to negotiate with.
"While some buyers might enjoy the
negotiation process, a solid buyer respects and appreciates a home
priced just right," says real estate broker Denise Panza.
4. You're turning people into "yes men."
Some sellers who price high are given false hope by agents who are uncomfortable telling their clients the truth.
"Beware of 'sign agents,'" says Jerry Grodesky,
an Illinois real estate broker. What's a sign agent? Some agents may
agree to any price you want just to get their sign on your lawn.
Roh Habibi, star
of the TV show "Million Dollar Listing San Francisco," says that some
agents like the prestige of having a high-priced listing associated with
their name.
Instead of listing at the inflated price,
Habibi says, he gets sellers to "come to realistic expectations of what
the home will likely sell for."
5. You squander the early days.
Sellers are in the driver's seat the
first 30 days a house is on the market. The listing is still new, so you
have buyers' attention.
The ideal scenario is that you price to
sell in the first two weeks, says David Feldberg, a California real
estate broker. That way, you stand to get multiple offers.
"When you price a home too high, you
waste some of the time [during which] you have the most leverage with
any potential buyer," says Feldberg.
6. Your house gets stale.
If your house is on the market longer than 30 days, buyers will start wondering whether something's wrong with it.
"Real estate agents refer to this as a stale home," says Texas real estate agent Sissy Lappin,
co-founder of ListingDoor.com. She adds, "When you price your home too
high, all you're doing is putting blood in the water for the sharks who
will wait until you lower your price."
And here's the real problem: When you do
drop the price, you often get less for your house than if you offered a
realistic price from the start. California real estate agent Drew Nelson
explains that the longer a house sits on the market "translates
directly to a larger discount from list price to ultimate sales price."
7. People won't even see your listing.
People generally set up search parameters by price when looking online for a home.
Let's say your house is worth $319,000,
but you're asking $330,000. You won't capture buyers who search for
houses within the $300,000 to $325,000 range.
"But if the house were priced properly,
it would show up in the buyer's search results," says Troy Balakhan, a
Florida real estate agent.
8. The house won't appraise at the high price.If you're selling to buyers who are getting a mortgage -- in other words, most buyers -- the lender will need an appraisal.
"If comparable home sales over the last
six months and current market conditions don't support your sales price,
then your buyer won't get the mortgage," explains Lawrence Sanek, a Florida real estate agent.
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