analytics

The Overpricing Trap

It’s often a mistake to list your home with an agent purely on the basis that they’re the highest bidder. While it’s true that you can always “come down”, there are many other factors you should take into account.

Firstly, the market is always looking for new listings. This means that for the first few weeks your home is on the market, it will generate more inspections than at any other time. All the buyers in your price range will rush to see your home. Those that have been looking for some time are the ones who have done their homework and are ready to buy now. But they will also be the most aware of the true market value of your property.

If your home is correctly priced it will make buyers feel they need to snap it up before someone else does. You’ll often find that a property that could have achieved $500,000 when first placed on the market, may become ‘stale’ and sell for only $480,000 after being on the market for three or four months. That’s because the longer your property stays on the market, the more that buyers feel they have negotiating power.

In a rising market, of course, sellers who hold out often achieve higher prices. But before those selling in a seller’s market get too excited, they should consider that if they are trading up to a more expensive property, they stand to lose more than they gain, as the equivalent percentage increase on the more expensive property translates into more in actual dollar terms.

If your home is correctly priced it will make buyers feel they need to snap it up before someone else does.  However, if the price is too high, they feel no such sense of urgency.