Here is a common real estate lie; you should overprice your home when listing it. Hmm. How many times have you played price compare on something small, like a new TV or computer? You usually have a list of wants and needs when thinking about buying something minor and you usually look around to see who has the best deal. Now, think about a TV. You want a 42″ TV- this is a need. You want it to be a smart TV and you want it to be made by Sony. You look around and you find a Sony 42″ smart TV for $899 at Target. You find the same exact TV at Walmart for $749. And you find a 42″ smart TV by Toshiba for $599 at Kmart. Most people will end up buying the TV from Kmart or Walmart, looking for the best deal. A few people who really want to pay for what they want will buy the $899 TB from Target. But how many retailers do you , lets use Target in this example, think that pricing the $899 TV for $1199 to see what they end up with is a good strategy? So, why do this for a house!
Setting your home price higher than what you expect to get is never a great strategy. Sure, in some cases it has worked for a few people. I’m sure, given the example above, some people who don’t price compare may end up buying the $1199 TV, too. Listing your home at too high can backfire into an offer that is too low. That’s because shoppers and their real estate agents often don’t even look at homes that are priced above market value. If you go into a store with $900 to buy a TV, you’re not going to walk over to the TVs that are $1500 and look at them. Why would you do this? You can’t afford them. Yet, pricing a home outside of a market range is supposed to bring in more offers and more money? It doesn’t really make sense.
It’s true you can always lower the price if the house doesn’t garner any offers in the first few weeks using this strategy, but then you run into a problem of people thinking that no one wants the home and then there is the question- why? In areas, such as San Francisco, where multiple offers are common, sellers tend to price their homes for less than they expect to get so that they can ignite multiple offers, which often results in more money then they could have ever hoped to receive for their home!
Don’t buy into the hype or the lie – overpricing your home in the current market isn’t a good move for most people.