Thursday, May 23, 2019

Should I overprice my home to "test" the market?

In this active market with tight inventory, it may be tempting to overprice your home to see if you can score a windfall. Testing the market by setting your list price above market value is not a sound strategy. Here's why;

You waste your early days 
The first month a house is on the market is when activity is highest. A new listing has the market’s attention. An accurate list price will increase the probability of selling in the first two weeks and improve your chance of multiple offers.

You lose credibility 
Savvy Buyers have done research and know what homes like yours are worth. When you price too high Buyers might not even look at your property.
You’re giving offers away
When your property is overpriced, you’re helping sell other homes that have accurate prices. After seeing your high-priced home, Buyers may be eager to get the better-value house nearby.

Days on market will increase
Buyers will start wondering if something is wrong with a property that sits on the market. Ironically, when you do drop the price repeatedly, you often get less for your property than if you offered a realistic price from the start.
Not everyone likes to play Let’s-Make-a-Deal 
Overpricing a home to ensure plenty of extra room for negotiations may backfire. Buyers will generally not engage in “low ball” offers and negotiations that drag out. Additionally, if Buyers overlook your house because it’s out of their budget, there will be no one to negotiate with.

You miss reaching your target audience 
Buyers generally search by price range when looking online. If your property is worth $319,000, but you’re asking $330,000, you won’t capture buyers who search for houses within the $300,000 to $325,000 range.

The house won’t appraise at the inflated price 
If you do get that inflated offer, your Buyer’s lender will need an appraisal to approve a mortgage. If comparable home sales over the last six months don’t support your sale price, then your Buyer won’t get the mortgage.

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