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It is fair to say that everyone listing a home on the market would like the home to sell. If not, why would they put it up for sale in the first place? But if you think about it, sellers that are not savvy and choose to ignore selling basics will end up suffering the consequences. To help you avoid becoming one of those people that commit serious pricing mistakes, we have explained seven ways overpricing would negatively impact your chances of a successful sale.
As a requirement of virtually all lenders, an appraisal is part of the loan approval process. And since almost all buyers obtain some form of financing the likelihood of finding an interested buyer that remains engaged in the transaction where the appraisal value doesn’t match the selling price is slim. In short – the selling price must line up with the appraised value and the market will determine the appraised value at the time.
Uninterested Buyers
No one will line up at your door when it comes to open house time. Today’s savvy buyers simply will not want to waste time on properties that seem way out of their league, appear to be listed with no room for negotiation or may end up taking more time overall.
The Property Is Flagged As a “Bad Choice”
People shopping for properties spend a lot of time searching many listings and eventually in the process, they end up with a system that quickly eliminates the bad picks and holds on to the potential ones for review later. A home that has been overpriced immediately raises a red flag and the potential buyer drops it off the list, labeling it as a “bad pick”.
Competition Gets the Upper Hand
When there are several similar properties for sale in the same vicinity, chances are buyers will look at most or all of them. If one or two of them are clearly priced more than others with the same square footage, amenities, neighborhood and other features, buyers will simply move away from your listing and go to other homes in the neighborhood.
The Home Becomes “Stale”
After a while, the same buyers looking for the same type of home will end up seeing the same homes that stay on the market and don’t sell. Since overpriced homes don’t sell too well, neither do they attract much attention and they end up looking like a lifeless vacant home. In fact, buyers begin wondering what is wrong with the property since it hasn’t sold, causing even fewer buyers to express an interest.
Wider Gap to Fill During Negotiations
Once there is an offer on the home there will be negotiations to contend with. Buyers being very knowledgeable and resourceful these days will have a fairly good idea of what your home is really worth. Together with their agent, they will leverage many factors during negotiation, including the appraisal value, other properties in the area and the current slow rate of appreciation in the housing market. With a wider gap to fill during negotiations (buyers starting out at market value and sellers’ starting point much higher) it will be difficult if not impossible to come to reasonable middle ground.
So often the perfect buyer, at the right time, is ready to make an offer on the home that has everything they want in it. But if that buyer never gets to see your home, they will never know that it is the perfect one for them. By listing your home way over the market value, you stand to risk losing the opportunity to meet the one buyer that is ready to buy your home.
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All of these can easily be avoided – simply by meeting with your Realtor to have a detailed consultation and determine the best price for your home, in its condition, within its location and relative to other properties in the area. Since many factors determine how much you can reasonably list your home for, it is vital that you meet with a professional that can make an accurate price determination for you. Remember, the more effectively your home is priced will result in a more positive and financially fruitful experience.
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