In hot markets, such as the one we are in today, many home sellers think that they can ask just about any high price and the home will sell. However, over-pricing a home could be one of the most costly mistakes that home sellers can make. The following is the life and effect of an over-priced listing, and how it ultimately helps your competition.
Day 1-10: Euphoria in the neighborhood because everyone thinks their home shot up in value because you listed your home at a really high price, higher than what the comparables show. The neighbors are throwing parties in your honor.
Day 10-30: OK, where are the offers? Hmmm…
Day 31-60: You ask your agent: “How is our marketing plan coming along? Any feedback from agents who are showing the home? What do you mean agents are not showing the home? That’s ok, I will wait.”
Day 61-90: Alrighty then… You are getting a little anxious. You start asking yourself: “Did we overprice our home?” Neighbors are putting their homes on the market for less and are selling. (Those neighbors are silently thanking you for helping them sell their home) Buyers are thinking something is wrong with your home because it has not sold in a hot market.
Day 120: Neighbors are once again throwing a party in your honor, because their sale closed and your over-priced listing helped them sell their home. Interesting how things always come full circle.
The above scenario is what happens every time you over-price your home. You will have a very difficult time under-selling your home in a hot market because it will generate a lot of offers and the market will ultimately determine your value. More offers means more competition, resulting in top dollar. No offers mean, well… no offers. Resist the urge to over-price, it has never been a good strategy.