Why it's risky to overprice your home
Category Sellers Guides
Pricing your home accurately is a critical factor to ensure a successful sale. While aiming for the highest possible price might seem like a logical strategy, there are some serious pitfalls to overpricing your home, especially within the current housing market.
"Buyer pools are tightening owing to high-interest rates. This means that homes that aren't priced competitively are unlikely to sell unless their asking price is reduced or market conditions change - which is unlikely to happen anytime soon," warns Adrian Goslett.
He adds that inflating the asking price will lead to a range of complications that not only deter potential buyers but also prolong how long it will take to complete a successful sale. "It is important to understand these risks so that homeowners can make a more informed decision around the asking price that should hopefully lead to a smoother and more successful sales process," he notes.
When a home is priced significantly above its market value, Goslett explains that it discourages potential buyers from even considering it. "Most buyers begin their house hunt online. When searching for homes on property portals, buyers will search within a certain price range, and if your home is priced above that range, it will not show up in their search results," he explains.
This tends to mean that the home will stay on the market for a longer period. The longer the home is on the market, the more buyers tend to think that there is something wrong with the property, which will often lead to cheeky offers down the line because buyers will think that the seller must be feeling more desperate to sell after all this time.
Goslett explains that overpriced homes also lose their new-to-market appeal. "When a new listing hits the property portals, buyers who have set alerts for that suburb will log in to see what's new to the market. If the price is set too high, the seller is likely to miss out on some of this initial surge of potential buyers who are actively looking for new listings," says Goslett.
Buyers are also spoiled for choice at the moment, which means that they have plenty of options to compare in terms of value. "If your home is priced much higher than comparable properties with similar features and in the same neighbourhood, buyers are more likely to opt for those lower-priced alternatives," says Goslett.
Many sellers also assume that buyers will come in with offers lower than the asking price. The problem is that when the asking price is too high, Goslett notes that rather than encouraging negotiations, it deters serious buyers from even making an offer because they assume that the negotiations will not bring the price down to a reasonable level. "This limits a seller's chances of receiving any offers at all," he warns.
The key to avoiding these downsides is to price the home correctly at the start. "Although it might not be what they want to hear, sellers need to be realistic about the current market conditions and lean on the advice of a trusted local real estate professional to make sure their home sells for full value," Goslett concludes.
Author: Team Seven