The benefits of overpricing your home in today's market

…For you as the seller? None.The partnership between a listing agent and their sellers should be under girded with telling the harsh truth of ‘estimate' of value, (even if it costs getting the listing): "This is what I believe it will sell for" seasoned with "but I've been wrong before".A broker might have a willingness to try a slightly higher price for an agreed upon short period of time with agreed upon time periods for steady reductions in pricing until you reach ‘the sweet spot.' When hiring a listing broker you should demand honesty with realism. Don't hire the one who tickled your ear with promises of more money. An experienced broker can give you an expected range and then – in this market –give you a very worst expectation below that! What sellers have been slow to recognize is that your home has three competitors:  1.  Bank Owned Properties (REO listing from banks' unemotional ‘clear it off our list now" low pricing). 2. Short Sales (sellers who have mortgage debt greater than current market value and don't care how low the price drops)  3. Sellers with enough equity who aggressively price their homes to sell, fully accepting current market conditions.  It's a buyers' market and will be for quite some time. Buyers should expect to get a great value. Buyers' first questions used to be "Why are they selling?' Now it's, "How long has it been on the market?"  Many days on market equates to proportionately lower offers. Releasing higher expectations in exchange for moving on can bring breathtaking relief.

  • November 15 2010 - Mukilteo
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Answers (7)

Well spoken Elizabeth!  Considering 27% of homes listed for sale in King County sell in the first 30 days and a whopping 46% of the homes listed never sell, it is incredibly important to list a home at its current value and not try to test the market with higher values.  The 46% of homes that never sell give other homeowners a false sense of security that the home will sell at that price.  We all know that Buyers are not willings to buy unless the home is perceived as a good deal.
  • November 15 2010
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Profile picture for karlaw

Great post Elizabeth. I agree completely. In this most challenging market, there's no sense in overpricing and "testing" the market. Being priced aggressively from day one is so important.

In fact, the last two sellers that took my advice and listed with the correct price from day one, had near full price offers on their homes in the first week, and sold right away. Just goes to show that even in this market, homes priced appropriately still sell. :)

  • November 15 2010
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Elizabeth - I love those two sentences! "When hiring a listing broker you should demand honesty with realism. Don't hire the one who tickled your ear with promises of more money."

Sellers - I've seen enough unhappy "potential" buyers who had their plans fall through because they never sold their current home first.  There's absolutely no benefit to overpricing a home.

Demand an honest valuation of your property and expect the agent to demonstrate they actually get homes sold.
  • November 15 2010
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even when sellers have a real "need" to move but are hamstrung by lack of equity - it just doesn't work.   I have listed properties like this for past customers or referrals and you hope and pray that it will all work out for them.    For strangers, I am not interested in listing overpriced properties,  unless I am really torn about likely sale price for some reason, and they have enough equity to reasonably make it work.  Then I encourage a price reduction after 30 days.
But, the sad truth is that the public has access to all the information that they care to research - if your home is overpriced no one will see it, no matter how motivated you might be as a seller.
  • November 16 2010
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I think you make some great points. I'm still new to this industry and have a lot to learn but what you say makes common sense. Getting that message across though often conflicts with seller expectations. After only a few months I can see that it's very important to stick to your guns. Those hhigh expectations and high prices lead to some pretty stale listings that nobody will look at even though they might be great properties.
  • November 16 2010
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        Thanks for the comments. I'd like to work with any one of you!
Do you find, as I often do, that the broker representing the other party takes offense at offers (or be it counter-offers), gets bent out of shape, threatens to go elsewhere... etc. All dumb responses when buyers and sellers are wanting to have success at the end of negotiating.
          Two professionals working together, keeping confidential their client's motivation but keeping negotiations "on the table"-- make for success nearly every time. How many of us have had the opposite, when a broker with attitude, takes his/her 'issues' back to the clients and blows what should have been success for all.
          I love working with brokers who hold before them the importance of what we do. It's not a sales business, it's service. Getting paid is the sideline. (And a nice one at that!)
  • January 01 2011
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Overpricing a house is great for competitive listings. They will sell quicker. I turn down listings when the owner wants to ask an unreasonable price. I'd rather go skiing than waste my time on it ......
  • September 07 2012
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