If you decide to test the market by pricing your home too high to see what happens, it is actually helping out your neighbor sell his house. For example, if a home in your area is at its true market value, and yours is far above, yet the prospective buyer liked your home…guess who they’re going to go with? This is actually also the same with apartments.
The cheaper you go for the true market value price is the one that is actually going to rent. To be fair, buyers and renters aren’t stupid. Everyone is online these days, and they know what goes for what in different areas, so you aren’t fooling anyone.
And, actually, many people actually have friends call and ask how the house went, and what it looks like. You know the prospective tenant or buyers response? “I loved it but they have it way overpriced. The landlord (or seller) is crazy. I wonder if they’ll ever even rent it. But I did find another one that’s really nice which is at a reasonable price range…where should we go for lunch?”
This is how quickly a buyer dismisses your home when you have it priced too high, even if they were in love with it. A common reason sellers price high is that it leaves room for negotiation. However, the issue with this tactic is that buyers overlook the house because it costs more than they can afford, so now, you have nobody to negotiate with.
Some sellers who price high are given false hope by agents who are uncomfortable telling their clients the truth. Beware of the type of agent that agrees with everything you say. Some agents just like the prestige of having their name in the yard of a high-price listing. Good agents should help the buyer come to realistic expectations of what the home will likely sell for.
Sellers are in the driver’s seat the first 30 days a house is on the market. The listing is still new, so you have buyers’ attention. The ideal scenario is that you price to sell in the first two weeks. That way, you stand to get multiple offers. When you price a home too high, you waste some of the time in which you have the most leverage with any potential buyer.
If your home stays on the market past 30 days, buyers assume something is wrong with it. People want what they can’t have. This type of home is commonly referred to as a “stale home.” When you price your home too high, all you’re doing is putting blood in the water for the sharks who will wait until you lower your price. When you do drop the price, you often get less for your house than if you offered a realistic price from the start.
People generally set up search parameters by price when looking online for a home. If the house were priced properly, it would show up in the buyer’s search results.
Most buyers need a mortgage. A lender requires an appraisal in order to approve the mortgage, which they will not do if the mortgage request is higher than the appraised value. If comparable home sales over the last six months and current market conditions don’t support your sales price, then your buyer won’t get the mortgage.