Dangers of Overpricing your Home
"My price may be on the high side, but bring me an offer!"
Serious buyers look in the price range that has been predetermined by their down payment and monthly payment ability. Unless your property is priced correctly, the down payment and monthly payment requirements will not be competitive.
A buyer, who is seriously looking, soon becomes very knowledgeable in their range. An unreasonable asking price only discourages them from looking and considering your property.
Buyers purchase by comparison and a property priced above the competition does not "compare" favourably. Inviting a buyer to make an offer could indicate that a fair price has not been established.
If you plan to adjust your price at the time of a sale, it is better to adjust the price now and attract serious buyers. This often places you in the favourable position of having more than one buyer interested in your property.
It is very difficult to obtain a reasonable offer on an over-priced property. The buyer feels they should be just as unreasonable in their offer as the seller was in the list price.
By contrast, offers are much easier to obtain on a reasonably priced property. You can then choose which offer to accept with no obligation to one that does not meet your requirements.
It is a mistake to believe that you will get more for a property by asking more. You usually get less, because fewer buyers will consider it when it’s placed on the market. The right buyers will not see it, and it usually stays on the market so long that it tends to become "shop worn."
To obtain proper market exposure, it is an absolute necessity to be competitive in price, terms, and conditions, with similar properties that are selling in the area.
If you are a serious seller, price your property at market, and attract serious buyers. You will stand a much better chance of getting full-market value, and your property will sell much faster.
1. An agent has no control over the market, only the marketing plan and the preparation of your home for sale.
2. Never select an agent based on price.
3. Pricing in rising and falling markets:
• Overpricing in a rising market may be OK;
• Overpricing in a falling market is disastrous.
• Market trend is as important as pricing.
4. Four kinds of numbers are used to represent your property
• Cost - What was paid plus capital improvements?
• Price - What the seller wants.
• Value - What a buyer is willing to pay.
• Fair Market Value - What a willing buyer and seller will agree upon.
5. Regression and progression
• Regression - the phenomenon of an expensive house being decreased in value because of the lesser desirable homes around it.
• Progression - the phenomenon of a home selling for more than its worth because of having more expensive property or a more desirable area around it.
• The value of an amenity is based upon what it will produce not what it will cost.
7. Reasons for overpricing
• Over Improvement - a seller cannot select, add to their lifestyle, enjoy it and expect the buyer to pay the original cost.
• Need - the need for money does not increase the value.
• Original purchase price too high does not increase the current value.
• Lacking factual comparable properties does not increase the value.
• Providing bargaining room does not increase the value.
8. The largest impression and most impact a property makes on the market upon buyers and upon agents is in the first few weeks of the listing. Therefore, it should show the best and be priced the best during those weeks.
9. Understand the benefits of "upgrading in a down market".
10. Benefits to Proper Pricing:
• Faster sale which will save carrying costs has value.
• Less inconvenience
• Exposure to more prospects
• Increased buyer agent response
• Better response from advertising & marketing
• Attracts higher offers
• Means more money to sellers
These pricing strategies were prepared because pricing may be a roadblock between you and your goals. My job when working for you is to identify these potential pitfalls and eliminate them.