Overpricing

Now more than ever, correct pricing sells properties!

I know you’ve heard it before, but I cannot stress the importance of pricing your property correctly! Here are some common results of overpricing…..

• Less “Eyes” on Your Listing. Savvy Buyers research the current market even before working with an agent. Many search available listings on-line and will set a price range to limit the listing they review. If your property is priced outside of their range, even by a few thousand dollars, it may not be on the Buyer’s radar. After researching on their own, most serious Buyers hire a Buyer’s Agent to them help them finalize their search. Most agents know their market and know when a property is overpriced. Because of the current supply of properties on the market, the agent will want to focus on properties that are priced right for their client.

• No Showings. Agents who work with Buyers will know the listing prices of comparable properties. If they feel your property is overpriced, they will be inclined not to show your property to their clients for fear of wasting their time.

• Helping Your Competition. This is a biggy…Overpricing your property can actually help your competition sell. Your property’s higher price will make your competition look like a steal. Astute selling agents for other properties will use the price gap as a selling point for their listing.

• Market Stagnation. By pricing high, you run the risk of being on the market for a long, long time. The longer it sits on the market, the more likely it will become stigmatized as an “overpriced” listing in the real estate community. Once this happens, it is hard, even with a price reduction to restore interest.

Remember, YOUR FIRST IMPRESSION IS A LASTING IMPRESSION!

• Tough Negotiations. Anyone who has worked with me knows that negotiating deals is one of my best abilities. A high listing price can be a warning flag that Buyers use during the negotiation process. Buyers will assume that you are either:

A) not well informed on the market,
B) not highly motivated,
C) have a need for money, or
D) are creating bargaining room.

With these assumptions, Buyers are likely to make low offers to find out how low you will go.

• Appraisal Problems. Let’s say you are lucky enough to find a Buyer willing to pay your high price, you then run the risk of the property not appraising. The appraiser will use sales data of comparable properties to justify your sales price. If there are not recent sales that justify the price, your property will not appraise out. Most Buyers finance a portion of their purchase, but many cash Buyers today are requiring appraisals of properties in their Offers to assure them of market value.

I work the Door County real estate market 24/7 and talk with Buyers and Sellers every day. Real estate values have declined and it can be hard to face the facts. There is a smaller pool of motivated Buyers and these motivated Buyers tend to be educated on the market. Without the assumption of value appreciation, few Buyers are willing to gamble and overpay for a property.

I want to thank, David C. Brenton of REMAX Select REALTORS in Greenwood, IN for providing the above information to me.