Selling your home is a big step, and of course you want to get the best possible price. It’s easy to assume that setting a high asking price will lead to higher sales, but sometimes excessive prices can actually work against you. When considering how to price your home in Boulder or Evanston, this Redfin Real Estate article explains the dangers of flaunting your home.
The initial excitement fades
When your home first hits the market, there is a window of opportunity that will generate the most buzz. Buyers and agents are always looking for new lists. If your home is at a competitive price, it will attract a lot of attention. However, if the price is too high, many potential buyers may skip altogether, assuming they are out of budget or are not worth it. This means you missed that initial surge in interest. This is important for quick and successful sales.
Stagnation and price reduction
Expensive homes tend to sit in the market for longer. After a few weeks, the buyers start to wonder why. They may assume that there is something wrong with the property, even if it is not. This will make your home “old” in the market. If you ultimately need to lower the price, it often informs the buyer that you are eager to sell, giving leverage to even lower negotiations.
Evaluation hurdles
Even if you find a buyer willing to pay an inflated price, you may face another hurdle: valuation. The lender needs an assessment to ensure that the value of the home supports the loan amount. If the valuation is lower than the agreed price, the buyer’s lender will not be able to approve a full mortgage. This can lead to frustration and delays that will require trading to fall or prices to be significantly reduced.
Missed the right buyer
Every home has a target audience. Overprice allows you to push your home out of buyer search parameters that fit perfectly. For example, if your home is really worth $400,000, but lists it at $450,000, you might miss out on all buyers searching in the $375,000-425,000 range. These are the buyers who value your home and are most likely to make a solid offer.
Retention cost
The longer your home sits on the market, the more it costs you. Think about ongoing mortgage payments, property taxes, insurance, and utility bills. These transport costs add up quickly and erode the potential profits you’d like to get from the higher asking price. Sometimes faster sales at fair prices can actually pocket more money in the long run.
What should I do instead?
To avoid these risks, it is essential to work with a knowledgeable real estate agent who can help you determine a realistic and competitive price for your home. They will look at recent sales of similar homes in your area and conduct a comparative market analysis (CMA). This data-driven approach helps you to attract buyers, generate offers and set prices that ultimately lead to successful sales.
FAQs about excess price of homes
Learn how to avoid overpricing your home so you don’t get out of a deal that’s less than you deserve. See what others are asking about the dangers of overpricing your home.
How can I know if my house is too expensive?
Real estate agents can provide comparative market analysis (CMA) that shows similar homes in your area are on sale recently. If your asking price is significantly higher than these equivalent sales, it can be a high price.
What if my house doesn’t rate the asking price?
If the rating is low, you may need to lower the asking price according to the valuation value. Alternatively, the buyer may need to cover the cash differences. If neither of these happens, the transaction could collapse.
Is it better to slightly price my home under market value?
A slight price under market value can generate multiple offers and increase the price. This strategy can create a sense of urgency and competition among buyers.
How long should my house be in the market before considering a price cut?
This varies by market, but in general, it’s a good time to revalue the price with your agent if your home hasn’t gotten much interest or offers within the first few weeks.
