Overpricing Your Home is Like Trying to Catch a Tiger with Fish Bait

Dated: 05/07/2019

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Overpricing Your Home is Like Trying to Catch a Tiger with a Fishing Rod

The Biggest Home Selling Myth Sellers Buy Into One of the biggest myths that I see a ton of clients try to buy into is that they should price their home high so that there is room for negotiation. It sounds like a plan right. Well not really. Today's consumer is more empowered than ever. They have access to almost the same amount of information that the real estate brokerage has access to. In addition to that, there are web sites that buyer's read comments from agents who actually toured the houses. Today's buyer is savvy and they know how to determine if something is priced properly or not. The buyer of today will do 90% of their home shopping on the internet. If they determine that the asking price of the home is overpriced, they usually opt to not even go to preview the property since they believe that an unrealistic seller will not work in "good faith" with them. One of the basic rules of selling anything is that it takes two tango. Without a buyer, you will have no one to negotiate with. Simple math, one buyer plus one seller equals one potential sale. When the buyer does not show up because you overpriced the product then you will have no one to negotiate with. The basic premise of negotiating anything is having two parties present at the table to collaborate together to arrive a mutually agreeable outcome.

Guess What If You Overprice Your Home?

By actually buying into this home selling myth that overpricing a property is meant to put some meat on the bone for negotiations, you will have thwarted any interested serious buyers. You may even get less showings. If your property is not being shown a few times a week by agents with their buyers, then you are probably overpriced. Open houses are not a good metric. The real metric for me for last decade and half is how many private appointments I get on a give property per week. If you are not getting private appointments during the week, that's a good sign the property is overpriced. A property priced correctly will get people out of work to come see it. If you turned people away on the Internet by overpricing your property, you’re going to be hard pressed to get anyone to negotiation table and even have a discussion with you. Buyers are already under financial and time constraints in most cases. They will not waste their time trying to work with someone who is unrealistic. When there are homes that are homes that are comparable and realistic in their pricing most consumers will just make offers on these homes. They don't want to waste their time on homes that are overpriced. Home buyers are more read up and researched than ever before. There are more real estate research tools available than there are hammers in a Home Depot today. They days of thinking there is a "sucker born every minute and two to take him" are gone. By overpricing your home, you will have accomplished the exact opposite by chasing away home possible prospects instead of luring them in. Most buyers assume an overpriced home is a reason to completely stay away altogether, rather than trying to negotiate with an unrealistic person.

Buyers You Are in the Same Boat Too

Although I am writing this about sellers and them putting the correct price tag on their property. The same is true for buyers. If you are a buyer and working with an agent, you should ask the agent about the list price to sales price ratio. If the last couple of months sales are coming in at 96.5% of the asking price, then I would argue that making an offer at 80% of the list price is going to be counterproductive to getting the seller to have a discussion at the negotiating table.

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