Overpricing your home in the hope a buyer doesn’t know any better and buys your home far above market value? Not sure if it happened more in the ‘old days’, but these days it is next to impossible. Reason? In our opinion, the internet is the biggest reason why today you cannot overprice your home any more.
We meet them daily; buyers who know about how much a home is worth. The internet provides the public with sold data and buyers get every listed home automatically by email, as soon as it comes close to their given criteria.
Here are some thoughts on why you should list your home at fair market value:
When overpricing, you will not get any showings. No showings means no offers. When you overprice your home, you make your competition look better. So that is where the showings take place. The listing down your street.
The home stays longer on the market. Almost every buyer asks us how long a home has been on the market. If it is on the market too long according to current statistics, buyers think there must be something wrong with the home.
Buyers are on a certain budget. They look at homes that fall under their maximum mortgage amount. If you overprice, you lose those potential buyers.
Realtors, appraisers and lenders
Realtors know it will be a waste of time and avoid showing your home, if it is overpriced.
Don’t underestimate the appraisal that is being done. Of course, the lender takes a look at the property. They want to make sure that the money they lend you leads to a fair deal. The lender can turn down the mortgage application of a buyer, if you try to price the home too high.
Who’s dream is it anyways?
Sometimes sellers want to overprice their home because they ‘need’ the money to be able to make their own dream come true. Is it really fair to ask a buyer to just pay more and make it their problem? Turn it the other way around and let’s say you, as the seller, price your home at fair market value. A potential buyer could come in and offer you 20% less because, otherwise he may not be able to buy a brand new truck he needs.
Sometimes sellers want to overprice their home because they have put so much money into the renovations*. Well, you as the seller did the renovations; you may have made bad choices, you may have paid too much for a bad contractor, or decided on the most expensive materials you could find. Or you initially did the renovations for your own enjoyment. Can you expect a buyer to take that on? It clearly would be the same if you, as the seller, priced the home at a fair market value and a potential buyer came in and asked you to drop the price 20% because the buyer then needs to change and renovate.
Price vs market
Overpricing your home never makes sense. Of course, it clearly must coincide with the current market situation. Is it a seller’s market or a buyer’s market? The type of market changes and shifts, so make sure you understand the current market. Have we priced homes a bit higher then market value just because it was a seller’s market? For sure we have. And often it worked, but it all depended on the actual amount. If you want to chat more about this, feel free to call us. Over the years, we have developed several tactics to get more dollars for your home. It will be a pleasure to do a comparative market analysis for you.
*before you start renovating, read our post about renovating your home. What renovations increase the value of your home?
If you are a buyer or a seller, and want to get updates on sold data, ask our free market report; a monthly email with sold data in your community.