Dangers of Overpricing A Home For Sale
Pacific Beach Real Estate, Mission Beach Real Estate, San Diego County Real Estate
Have your ever paid $26,000 for a $17,000 car? Have you ever offered $37 for a $29 skirt or slacks? If beef roast is selling for $3.99 a pound, would you take one with a $5.99/pound price?
Most buyers comparison shop before making purchases. When buying a car, they compare the various models, i.e. Olds 88 vs. Buick Park Avenue. Once prices have been compared, and a selection made, it is highly unlikely that the buyer will go to the car dealer with the highest price.
Home buyers are no different. After viewing 6-8 homes which meet their requirements, they are likely to narrow their choice to two or three which meet their objectives. They rarely purchase the one with the highest price, unless it offers more value. Why pay more than a fair price, they reason. If you plan to sell your home, that's an important point to remember. As a seller, you are competing for buyers.
Sellers play a major role in influencing buyers to choose their home. By pricing their home at fair market value
, and offering it in model home condition, buyers will get excited, resulting in an early sale.
Because they comparison shop, buyers recognize a home that is priced fairly, and often make full price offers. A home priced above the market encourages low offers and, ultimately compromise. It may also discourage offers completely.
Results of Overpriced Homes
: An overpriced house discourages prospective buyers form making offers since the difference between the asking price and market price becomes substantial.
Reduces Agent Enthusiasm and Response
: Agents lose interest in property that is overpriced. They do not spend as much time in moving the house as they would if it were priced right.
Minimizes Qualified Buyer Exposure
: Overpriced houses fail to attract qualified buyers, or attract "wrong" buyers.
Decline in Showings
: Agents avoid showing overpriced houses in order not to lose credibility with buyers.
Less Prospects from Signs
: Prospects who learn about the house from the sign get turned off if it is overpriced. They do not pursue the matter to see the house.
: Financial institutions and mortgage companies finance only a percentage of the real value of the house. If the house is overpriced, they usually will finance a lower percentage, thus reducing the available financing.
Wastes Advertising Dollars
: A house that is unrealistically priced fails to get normal advertising response. This reduces the effectiveness of advertising and results in the loss of advertising dollars.
Less For Seller
: Eventually market interest in the overpriced property completely declines. As this stage is reached, the seller becomes desperate and he begins to feel he would sell at any price. In the meantime, he or she must bear maintenance and holding costs. The net result is that the seller gets much less than he could have if the house was correctly priced in the first place.