Many homeowners feel that they can simply overprice their home in the beginning and if it doesn't sell or there are no bites on the home vacant lower the price. There are many drawbacks and negative connotations to this type of pricing. Often times, homeowners or sellers that use this type of strategy are not actually serious and selling their home. If they get the higher price, great! If not, they can simply lowered and tell they feel they are at the lowest they would want to offer their home. Serious sellers typically do not use the strategy and most real estate agents would not recommend it. There are dangerous pitfalls to overpricing your home. Many homeowners feel that they can rationalize their higher price by saying that their home is in high demand, it's a sellers market, buyers could pay more because of the amenities or the area, national websites such as Zillow state that their home is worth more or a neighbor recently sold a home for the same price or higher.
Whatever the reason for overpricing your home there are serious ramifications that could not only cause the home not to sell but could severely damage the market in the neighborhood in general.
BUYERS MARKET
If you overprice your home in a buyers market you may simply just not get any interest in the home. If homebuyers can get the same type of property for 5% less, why would even bother looking at your home. In a buyers market, buyers can afford to be more selective and they can find more options in their price range. If the home is completely overprice, the home will not even show up in the list of potential candidates. All buyers are looking for a great deal on their home but overpricing the home means you just won't get the interest in the property nor the buyers coming through. Buyers that do come through the property are expecting something a lot more and when they see that compared to similar properties the home is overprice, you just won't get the action the home needs.
SELLERS MARKET
It can be very tempting to overprice in a sellers market. Some homes can actually sell for higher than market value and buyers could compete in offers for the same property. However, you could falsely create competition and bidding could often ensue. The downside to this is that if the buyer is financing the property, the appraisal will show that the home is not actually worth what the buyers willing to offer. The seller may in turn need to drop the price in general or the buyer will need to come up with the remainder on their own, something that's pretty rare to do.
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Many homeowners feel that they can overprice their home but then drop the price if they're not getting any action. This strategy may seem like the best way to go but it usually backfires. By the time the homeowner drops the price down where it should be, the property has sat on the market too long and buyers may be wary of a longer listed property in general. By the time you drop the price lower than market value just to get a buyer in the door, you've actually lost money. The longer your home sits on the market the more burden it can be to you if you're planning on selling and moving quickly.
RISKY OVER PRICING
Pricing a home correctly from the beginning is the key to getting of the right price and moving on with your life. Using a local real estate agent that not only knows the city but the an individual neighborhood in which you're selling can help price the home correctly from the beginning. Pricing a home above the estimated market value will naturally take longer to sell. Pricing it correctly from the beginning means you get the right type of buyer in the door and if it's priced competitively, just slightly less than your closest competition, you'll get more offers on the table and potentially multiple offers.
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Do you want to risk overpricing your home with all the pitfalls that can happen? Is extremely rare for a homeowner to get over the market value and then actually have that market value be appraised as such. It's a much better and much more rewarding to price it correctly, get the profit you need and sell the home as quickly as possible. For more information on selling your Portland home please contact Marcus Brown with Marcus Brown Properties.
External Resources provided by: Vision Realty - Ronald Christopher & Associates