When it comes time to sell your home, determining its exact value can be a challenge. Naturally, homeowners want to get the most value for their home. However, if it hits the market at too high a price, it could cause serious complications in the selling process.
Dangers of an Overpriced Home
Attracting the Wrong Buyers
An overpriced home creates a kind of seller’s limbo that draws the attention of the wrong buyers, which is a surefire way to start your selling process off on the wrong foot.
A vast majority of homebuyers begin their home search online, especially during these days of social distancing amidst the COVID-19 pandemic. If your home is overpriced in comparison to other listings in your area, it won’t appear in their search results. In this way, an overpriced home is blind to its intended buyers and actually drives traffic to nearby listings that are more accurately priced.
An overpriced home can’t compete with listings in a more expensive bracket. Buyers know what they want, and they know what to expect in their price range. When they notice a home is missing the square footage, features, and amenities typically found in others at the same price, they will quickly lose interest.
Fewer Showings / Virtual Tours
Showings—both physical and virtual—play a significant role in the sale of your home. They give buyers a first-hand look and provide them the opportunity to ask questions and gather more information. Selling your home is a numbers game. The more showings scheduled at your listing, the more potential buyers you have. The more potential buyers, the greater chance of an offer.
Your agent knows that showings are critical to capturing buyer interest. But if the home is overpriced, they will have difficulty attracting attention to your home. This can slow the entire home selling process, leaving both the seller and agent feeling frustrated.
Expired Shelf Life
Think of the home you’re selling as a fresh tomato. Off the vine (newly listed), it is fresh and attractive, appealing to everyone in the market and standing out amongst the other tomatoes. As time goes on, no one buys the tomato and it begins to over-ripen and wither, losing its appeal. This is what happens to an overpriced home in the minds of buyers.
New listings attract the most attention—that’s when buyer interest is highest. The longer your home is on the market, the less appealing it becomes. At a certain point, sellers are forced to lower the price. However, this lowered price won’t have the same impact as hitting the market correctly priced the first time. Once price drops begin, they can continue, which creates the risk of selling the home for less than what it is worth.
Lastly, the longer your home is on the market, the more expenses you incur. Mortgage payments, utilities costs and seller’s fees will continue to pile up, making it harder to recover from these costs when your home does eventually sell.
Let’s say you do find a buyer at the overpriced cost. During closing, the lender will order an appraisal of your home, and if the appraiser finds that the market value of the home is less than the selling price, they could potentially deny financing.
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