Perils of Overpricing

The basic forces of supply and demand are evident in these survey results that compare the average percent difference between the asking prices of homes and the actual selling prices.  On average, homes that were on the market for less than four weeks actually sold for slightly more than the original asking price.  However, as the length of time a home was on the market increased, so did the difference between the asking price and the selling price.  Homes on the market for more than 24 weeks sold for an average of 10 percent less than the asking price.

Difference Between Selling Price & Asking Price
by
Length of Time Home Was On the Market 

• Buyers are aware of how long a property has been on the market.  If a property takes a long time to sell, buyers usually attribute that to overpricing.
• Overpricing reduces the response to any merchandising done for the property, and will not produce results.
  
• Buyers look at prices on many comparable properties.  If your property does not compare favorably, it won’t sell.
  
• Proper pricing will produce an early sale.
  
• Buyers avoid overpriced homes, and usually do not choose to look at them.
  
• If overpricing delays a sale, the cost and inconvenience could be prohibitive.  (Examples: Delay in job transfer, payment on two mortgages, wear and tear on your present property, loss of opportunity elsewhere, etc.)
  
• Top agents don’t show “old” listings.
  
• Two questions buyer prospects usually ask before viewing a property are:
  • “What’s the price?”
  • “How long has it been on the market?”
• The Internet makes it possible for prospective buyers to evaluate homes prior to looking at them and those that are “overpriced.”
• Properties that are reasonably priced create a sense of “urgency” in prospects’ minds.
  

Homes sell at fair market value.  Pricing a home realistically will bring an early sale, fewer inconveniences, and a greater monetary return.