“Over-Pricing” – Seller’s Biggest Mistake

23 06 2010

The biggest mistake you can do in selling real estate is over pricing. Sellers can’t make a bigger mistake than listing their house above market value. It’s easy when sellers interview different real estate agents to see who should list their property and get caught up on choosing a listing price. The excitement of getting more money from the sale of their home can help them (homeowner/seller) out with financial opportunities. Whether it is being able to purchase a bigger home, pay for kids’ tuition, put more into the retirement fund, or take the dream vacation, sellers often choose the listing agent who suggests the highest sales price. AKA – Seller’s Biggest Mistake.

So how do you decide on what price you should list your house at?

It doesn’t matter how much you think your house is worth, nor what your real estate agent thinks your house is worth, the person whose opinion matters the most is the buyer. Pricing your house too high – puts you out of the budget for some, buyer’s might not qualify, and won’t stack up to other comparables.

There is an art to pricing your home, and a method behind the madness. Comparing similar properties and making adjustments for the differences between them, keeping in mind of the real estate market, and area differences, to finally approach to an educated estimated value that will sell. It’s similar to appraising the value of a home (ex. house insurance estimates), a different appraisers will give different quotes, but they are generally in the same range and not too far off from each. There is no cookie cutter approach to arrive at a perfect listing price, there are only ways that can help you make the best educated guess and the market will dicate the selling price.

Is it possible to list my house too low?

Homes sell when there is a meeting of the minds between buyer and seller. Listing your home too low, below the comparables in the area, the market may dictate the price because you may receive multiple offers which will drive up the selling price to market value. So there is less risk when pricing a home lower than other comparables. It gets risky when the price is too high.

Costs of Over Pricing

Think you can make more money by listing your house for more? Or do you just think your house is worth more than the comparables? The financial loss incurred can often exceed the potential gains by “selling” your over priced house. The extra time it takes to sell (because over priced properties have more days on the market),  incurred costs of extra mortgage payments paid and the time and effort required to keep the house spotless for showings, the extra days on market, makes it not worth the extra money from the over priced property. Your listing will sit on the market for days, become stale, out-dated, and market-worn. There’s nothing worse than having an expired listing. Don’t be a victim of over pricing!