Pricing Your Home...
The Pitfalls of Overpricing Your House
Buying real estate is often an emotional decision, but when selling real estate you need to remove emotion from the equation. You need to think of your house as a marketable commodity and the price you put on your commodity is very important.
Don't base your decision to work with one real estate agent over another based on their recommended price of the house. If you do this you will choose the agent with the highest price and this may not necessarily be the best agent for the job. If you start out with too high a price on your home you may be adding to the stress level of selling your home, and selling a home is stressful enough.
Contrary to popular belief, the listing agent does not only attempt to sell your home to a home buyer. That isn't very efficient. Listing agents market and promote your home to all the other local agents who are working with home buyers, dramatically increasing your personal sales force. If the home is priced right, you should have a flurry of activity from other agents looking to work with your agent to get your home sold to their buyers.
If your home is overpriced, there will be fewer calls and fewer showings. After all, these are real estate agents and they are familiar with the market and home values. If your house is dramatically above market, then why would they waste their time showing an overpriced house? Their time is better spent showing homes that are priced realistically. Or worse yet, your home will be shown in comparison to a house down the street that is priced in line with the market to show the buyer what a good buy the home down the street is.
If you drop your price later, then your house is "old news". A price decrease does not gain the attention that a newly listed house with the right price does. By listing your home at a "too high price" you are only causing your house to take longer to sell.
Even if you do successfully sell at an above market price, your buyer will need a mortgage. The mortgage lender requires an appraisal. If comparable sales for the last six months and current market conditions do not support your sales price, the house won't appraise at a price to support the loan amount requested. Your deal may fall apart and your house ends up back on the market.
The longer your house sits on the market the more potential buyers think you are desperate to sell, so they will make lower offers. By overpricing your home in the beginning, you could actually end up settling for a lower price than you would normally have received if you had priced the house right to start with.