You may think that interested buyers can always make an offer but if the property is overpriced, potential buyers looking in a lower price range will never see it!
As soon as a property comes on the market, there is a flurry of activity surrounding it. This is the crucial time when realtors and potential buyers sit up and take notice. If the property is overpriced, it doesn't take long for interested parties to lose interest. By the time the price drops, a majority of buyers are lost.
The following are some of the reasons that sellers may have for wishing to inflate the price of their property:
- Extensive renovations/hidden costs
- Desire to purchase in a higher-priced area
- Original cost of the property was too high
- Lack of real market information
- Building in "bargaining room"
- Perceived "emotional value" (e.g. the house where your first child was born
The results of overpricing:
- Many sellers believe that if they price their property high initially, they can lower it later.
- Often, when a home is priced too high, it experiences little activity. Gradually the price will come down to market value, but by that time it's been for sale too long and some buyers will be wary and reject the property.
- On occasion, the price is dropped below market value because the seller runs out of time. The property then sells for less than its worth.
Learn how to price your property right (and many more tips!) in our Home Seller Guide here.