Why Do Sellers Overprice Their Homes?
For most people a home is the single most expensive purchase they will ever make. It’s the place where they will raise their family and create a lifetime memories; it’s not just a possession, it’s an extension of themselves. Many times sellers lose sight of the fact that to everyone else, it’s just an object. Real estate agents will tell you “Overprice your home and it will take longer to sell and get you a lower sale price” yet sellers ignore them and do it anyways. The question is why do they do it? Lots of reasons.
- I can be reduce later if no one bites
- My home is just worth more than every other home
- A “similar” home sold for more than all the others
- I need that number to get their next home
- If the agent works harder a buyer will pay
None of this matters to buyers…none of it. Buyers’ will look at other homes and compare their features and benefits with your home. They do the same thing with sold homes and formulate their own price. Take note…all buyers are using the same data.
How Buyers Determine Price
Buyers search for homes in price increments based on their budget. Overpriced homes often fall outside that range so they are unnoticed by those buyers. For example; buyers are looking for homes in the $550,000 - $575,000 range but you priced your home at $599,000 even though similar homes have sold for $555,000. The buyers who should buy your home will never see it and buyers shopping in the $575,000 - $600,000 range will see your home as the poorest option among larger, better homes.
Homes that sit on the market too long become stigmatized, especially when homes are generally selling quickly. Agents also say that “Your best offer will come in the first few weeks.” After that time, even if you lower the price, buyers will either:
- Offer you a lowball price. (It only seems fair to offer way under since you listed it way over.)
- Avoid it. If no one has bought it yet there must a problem and no one wants to buy a problem.
I Can Always Reduce It Later
It’s your home and you can do whatever you like however, buyers, like you can do as they please. When you reduce your price buyers will be skeptical about your home and instead will flock to the ‘new’ listings. You will be tagged as either unreasonable or that the home has a problem. Either way this stigma will stick with you.
My House is Worth More Than Every Other Home
Everyone thinks their baby is beautiful and most people think their home is better than the neighbors. The fact that you put gold leaf on the toilet and upgraded your roofing nails is really something you did for you, not for the buyers. You love your home and it’s tough to move on however these are your personal feelings and have nothing to do with the market. To everyone else it’s just business so the best thing you can do is make your home the best version of itself and price it right to get the most money.
A “Similar” House Sold For More Than All The Others
You may have heard that a house just like yours sold not that long ago for a good price. You never saw the house, don’t know the details but are sure yours is just as good if not better than that one however your real estate agents tells you that your house is worth less. Why? Your agent knows a lot about the current market, far more than you may realize. He or she has a wide network of information and other Realtors to draw on when deciding on the price of a house. Even though your neighbor claims that the other house was just like yours, your agent may know that this is simply not the case. It could be that the other area is more desirable, or that home had better features.
I Need a That Number to Get My Next Home
Again, buyers aren’t concerned with your personal situation. They don’t care if you overpaid for the house when you bought it, if you over improved the house or if you want your next house to be beyond your means. Like you they are looking out for themselves and there’s more of them than there are of you. Basically…you’re outnumbered!
So, you can stay put and wait for more favourable times or, you can sell it at the right price and adjust your expectations. What you can’t do is expect the world to sympathize with you and give you more than they should.
The Real Estate Agent Just Needs to Work Harder
There are agents out there who will agree with you that your house IS worth more however, if they can’t back it up with facts, chances are this agent is just telling you what you want to hear to get your business. If they can’t get you to the right price they will use your home to generate business for themselves and to sell other homes (since they look more attractive compared to your home).
As we noted above the longer you’re on the market the worse it is for you, find an agent who will price it right, who you feel comfortable and confident with and you will be financially further ahead.