Most experts would advise that the best way to increase your odds of a successful sale is to price your home at fair market value. But, as logical as this advice sounds, for many sellers it is still tempting to tack a few percentage points onto the price to “leave room to negotiate”. To avoid this temptation, let’s take a look at the nine deadly sins of overpricing:
1. Lost Opportunities
You will lose a percentage of buyers who are outside of your price point. These are buyers who are looking in the price range that the property will eventually sell for, but don’t see your property because the price is above their pre-set budget. Most buyers look at 10-15 properties before making a buying decision. Because of this, setting a competitive price relative to the competition is an essential component to a successful marketing strategy. Many marketing tools especially in the internet include searches by price categories, if your property is overpriced it will not even be seen by potential buyers.
2. No Showings
Today’s sophisticated buyers are well educated about the real estate market. If your home is overpriced they
won’t bother looking at it, therefore no offers will come in to start a negotiation.
3. Negative Branding
When a new listing hits the market, every agents quickly checks the property out to see if it’s a good fit for their
clients. If your property is branded as “overpriced”, reigniting interest may take drastic measures on your property. An agent marketing overpriced properties will gain questionable reputations among their peers and might affect the entire agency.
4. Selling the Competition
Overpricing helps your competition. How? You make their lower prices seem like bargains. Nothing is worse than
watching your neighbors put up a sold sign.
The longer your home sits on the market, the more likely it is to become stigmatized or stale. Have you ever seen a property that seems to be perpetually for sale? Do you ever wonder – What’s wrong with it?
6. Tougher Negotiations
Buyers who do view your property may negotiate harder because it has been on the market for a longer period of time and because it is overpriced compared to the competition.
7. Appraisal Killer
Even if you do find a buyer willing to pay an inflated price, in case the buyer uses some kind of financing to pay for their property and your property won’t appraise for the purchase price, the sale will likely fail.
8. The agent with the highest price recomendation will get the listing.
You spoke to several realtors before you hired the one who recommended the highest price for your home. Good agents seldom want to take a property that is overpriced, simply for the fact that the chances of selling it are slim, and that means their chances of making a commission are greatly reduced. Real Estate agents are (or should be) intimately familiar with most real estate activities in their market, and they should have the best idea of how a home should be priced.
9. You still haven’t received an offer.
Don’t panic just yet. (it’s not uncommon for high high-end homes or secondary homes like vacation properties for example, to stay on the market for years) If there is very limited interest in the property, it’s not too late to reduce the price, but it’s important to act quick in order to sustain some interest.
Content collected at Trulia.com, Forbes and similar sources and then adjusted to fit the Costa Rica Real Estate market.