Melvin Feller Discusses Reasons Why Overpricing You Property May Result in Unfavorable Effects

Melvin Feller Discusses Reasons Why Overpricing You Property May Result in Unfavorable Effects

Therefore, if you or your real estate agent starts out with that particular property priced too high it will dissuade buyers from wanting to come and view the property.  In addition, you are also sending a message to the real estate community and the home buying community that you most likely are an unreasonable seller.

When you are considering the price of your property, you want to compare similar properties with similar features. Consider the items, which you think, may add 5% to the overall value really can be subjective to a both a buyer and an appraiser. In addition, looking at internet estimates is not a good idea, as they do not take into account condition, upgrades, location and other variables, which show the true value of a property.

Value of the Home When It Goes Live

The highest perceived value of a property is when the property is first listed and goes on the market.  This is the time when the property has the most interest and the most activity. In fact, the first two weeks are the most critical because that is when it receives the most attention.  In other words, that is when it will attract the highest number of prospective buyers. If the home is overpriced, then it may sit on the market without any offers for a long period. When your property hits the market as a new listing, it is in the most desirable position and the most interested competition will be at its highest point in the life of that listing. Therefore, the bottom line is if you price your property too high and it languishes on the market, you are taking the risk the listing will become “stale and or perceived to have several issues with it”.

Unlikely Price Reduction

Therefore, once you realize that your property is overpriced based upon the amount of activity, in showings, it is getting and you are forced into an unrealistic price reduction; realistically, it will remain priced over the market value.  

However, most real estate agents will argue that by making a change on the MLS, the property actually goes ends up back on a hot sheet, and brokers and buyers will see it. This makes it appear as a new listing many times but it remains difficult to get buyers back once they move on after determining that the price has been established as too high.

If you are making a price reduction, or your real estate agent, makes a price reduction in order to be in alignment or slightly lower than the market. Shaving away slowly at the price actually is perceived as desperation! After a buyer moves on from a listing, they may forget about it all together or not care to come back to look at again because the property’s price has been lowered. It is a well-known fact that buyers may think that the seller is unrealistic and most likely are difficult to deal with in a possible transaction!

Pursuing the Market After the Price Cut

By just staying slightly above your real estate market, you can actually be construed as chasing it melfeller burkburnett! Unthinking you are going to get every dollar and that your upgrades that were done 8 to 10 years ago actually add value, you are being irrational. Most buyers are coming in and deciding on the things that they are going to change in the property to make it their own with current decorative trends. Therefore, the bottom line is that small price adjustments allow you to stay just above the market, and you will in all likelihood continue to chase the market on down ward trend. By setting your price above the market value, you will certainly have fewer offers that come in on the property, and the buyer, in most likely hood, may not be as strong as you would like financially!

In all of the years, I have been involved in real estate; it is difficult to recover from pricing property above the market. Your home has one chance to be a new listing, so it is imperative to price it correctly right from the beginning!

Multiple Offers Questionable

In an ideal world when a property is priced to sell at market value or if it is priced slightly under market value, this in turn creates a commotion of activity and idyllically, buyers will make an offer at list price or higher to secure the property.  In addition, when a house is priced competitively, buyers are willing to offer a fair market value offer or higher in order to secure the property.

Having a multiple offer situation is highly unlikely with a property that is overpriced. Remembering that the majority of buyers already think the seller may be difficult to deal with!

How Will the Property Appraise

In the unlikely opportunity that you do find a buyer who is willing to pay an exaggerated price for the property and that buyer is procuring a loan, you then have to consider the appraisal. An appraiser is going to come out to the property and ONLY consider “like” properties, which have sold in the last 30 to 60 days, in addition to taking into account any upgrades the home may have had and  determine an appraised value.

If the appraisal comes in low, then the sale can fall through, because most buyers are not going to pay over appraised value. Moreover, the lender is not going to loan on an inflated amount, lenders are going to loan on appraised value.

If in doubt about a price, the best solution can be to have you or the seller pay for an appraisal prior to placing it on the market. This appraisal could serve to be a selling point for the property as it could be shown to a potential buyer that it already appraised at stated and market driven value in order to authenticate the list price.

Accumulating Days on Market

When a home is listed for sale and begins to accumulate too many days on market, buyers may wonder why it is still sitting on the market. Being overpriced sends a message to the buying community that you may be an unrealistic seller and a buyer may not want to consider going into escrow with someone who can be unrealistic. Days on market can make the listing seem stale! In addition, new listings in the same area come on the market, and buyers may flock to those because of better locations, features and, more importantly, a realistic price. Your overpriced listing can help sell the new one that came on the market.  Believe me you do not want to be in that position at all!

Desperation Selling

Perhaps you or the seller have already purchased a property out of the area, and it is late summer, and the children need to start school in their new school, this may result in the seller dropping the price just to sell it! Moreover, perhaps even carrying two mortgages may become overwhelming and unrealistic for a seller. Generally, when you are someone becomes desperate, you will make the necessary adjustments in order to sell the property quickly. This can result in a very low sales price and you do not want to sell out of desperation!   Why take less at the end then you could have more right from the beginning just be starting out correctly. 

The bottom line is that by assembling a plan from the beginning will result in the highest market value for your property in the undeviating period!

In other words, overpricing your property can have long-term negative effects, which are difficult to recover from in the selling process. Work with an experienced agent, or better yet, you learn how to verify and price your properties, as well as, look at the comparable like properties that have sold, and the direction the market is going. It is never a good notion to “test the market” just to “see” if you can get a higher price. Price it to sell, and keep in mind it is a business transaction.  You are in the business of making money!