When an Owner overprices their Home – 5 things to consider
I work with a lot of home owners that are looking to put their property into rental or sale service. One common problem is that owners believe that their house should rent or sell for more than their competition and insist on placing their home on the market for higher than our recommended price.
What owner’s don’t understand is that by overpricing your home, you are creating a bigger issue for your home. Here are 5 things to consider when faced with the fact that your agent wants price your home lower than you would like:
1. Potential buyers/renters won’t even see your property. Typically buyers & renters are looking for a specific price point. If you are not in their target range, then your home will not be found. If your home is in a higher price point than your competition, they will see the difference and pass over your home.
2. Multiple price reductions can make you look desperate – inviting even more negotiation.
3. The longer it is on the market, the “staler” it gets. Most sites share how long it has been since it was originally listed. Sometimes it is best to get a new listing, but this can be costly as most sites require that you start from scratch for all the advertising versus just renewing which costs less.
4. If selling – your home may not even appraise. If you are lucky enough to find someone to purchase your home, you may be required to reduce it anyway if the home doesn’t appraise.
If renting – you will end up helping to rent your competitors home before yours and you will have to pay the additional mortgage payments while you wait for a renter to bite on your home. Typically 1 month’s holding cost will pay for the small difference in price that we recommend.
5. It will cost you more money in the long run by overpricing your listing. When you take into account all of the factors above – length of time on the market, the additional negotiation from the buyer/rent for concessions, additional advertising costs that you may have to pay and the fact that you may be forced to reduce the price anyway – all translates to lost time and value.
Even knowing all of this, I am still amazed at the number of owners in this market that want to over price their homes. When I try and share this information with them up front, they state something like – “well let’s try my price and then we can always reduce it.” After weeks of no showings, they are upset and don’t know why their home isn’t selling/renting. Listen to the professionals – it will pay off!
