Reasons Sellers Overprice Their Homes
For most people a home is their most prized possession. Homes cost a great deal of money and they are often the place where lifetime memories are made. These realities are undeniable – but they can negatively impact your ability to sell your house if you let emotion take over your logical side. Here are some of the more popular reasons sellers give for overpricing their home – a real problem when trying to sell in a timely manner and for a good price.
Overpricing a home is the #1 way sellers sabotage their ability to get the most money for their property. The common logic is that pricing a home higher will lead to a higher sale price – WRONG! Price a home improperly and you will create a whole slew of negative consequences including no sale.
I’m Not in a Hurry to Sell
This is probably the most legitimate reason for setting too high a price on a home. If you are really in no hurry to sell your home then you can set whatever price you want. Who knows, maybe someone will come along and be willing to pay far above market value. You may also win the lottery before the offer comes, making your need to sell even less. If you do not need to sell your house right now at the price you can reasonably expect to get, it is probably worth skipping the whole selling process and waiting for a time that fits with your needs. The market may go up or it may go down, but the best time to sell is going to be when you actually want to get the sale done. What many homeowners fail to understand is that time is your enemy not your friend. While you may have all the time in the world to sell your home the market looks at your home being on the market for a long time in a negative light.
A potential buyer has two things going on in their mind when they see a property languishing on the market.
- The first thought they will have is what’s wrong with the property. If nobody else has grabbed the home and it has been on the market this long there must be a problem.
- The second thought that will enter a buyers mind is how much of a discount they can get. The longer a home is on the market the more apt a buyer is to place a low ball offer on your home. It is a fact that there is a strong relationship between the time on the market of a home and the gap between the list price and sale price.
I Can Always Come Down on My Price
This is technically true. You are in complete control of what price you accept for your property. It is yours, after all. The problem with this idea is that it fails to take into account the realities of selling a home. If your home does not sell in a timely manner it will eventually start to take on a negative stigma. As mentioned above, buyers are suspicious of homes that have been on the market too long.
It makes them think that you must not really want to sell, that you are unreasonable, or that there is something wrong with your home. The longer they are allowed to think this and the more common this perception becomes, the more likely you are to start getting offers you would never consider or none at all! You can always come down on the price, but not pricing a home properly from day one is a mistake that almost always has negative consequences.
I “Feel” My House is Worth X Amount of Dollars
Having feelings about your home is a natural thing. Most people have some sort of emotional ties to the place they live. Unfortunately, selling a home is a business transaction. While feelings can be useful in business, they are not the ultimate deciding factor. The market is. If the market says that your house is worth a certain amount of money, it doesn’t matter how strongly you feel otherwise.
Unless you find someone incredibly naive and with deep pockets – lenders always review the market value of a home before handing over money – the market will ultimately rule over the sale of your home. If other similar homes are selling for substantially less than your house is, you can expect to sell at a similar dollar amount. Expecting anything else is unrealistic.
I Need This Much For Negotiating Room
For some reason there are many sellers who believe you need a huge spread between what a home is listed for vs what it will ultimately sell for. This is patently false. It is a very common misconception that a real estate agent should be able to show on paper with comparable sales data. A year or so again I was meeting with a seller who owned real estate in Upton Massachusetts. He was one of those stubborn sellers who think they know more about real estate than a professional does. He had himself convinced that his home needed to be priced almost $50,000 more than it should be because he would need “negotiating room” to come down.
Along the way I figured out his thought process and emphasized clearly by showing him in black and white that most of the homes comparable to his were selling around $10,000 less than asking. Once he saw how off base his thinking was my advice about pricing property started to sink in.
Sometimes this is what it takes. Showing people facts is a lot more powerful than telling them. Seeing homes that are sitting stagnant on the market for an extended amount of time with multiple reductions is never the best way to get the maximum amount of money for a home.
A Similar House Sold For “This” Much More
You may have heard from your neighbors that a house just like yours sold one neighborhood over for a certain amount of money. Well, why can’t you sell yours for the same price? Except your real estate agent tells you that your house is worth less. Why? Your agent knows a lot about the current market, far more than you may realize. He or she has a wide network of information and other Realtors to draw on when deciding on the price of a house. He or she is also highly motivated to sell. It is how money is made as a real estate agent. This means that, even though your neighbor claims that the other house was just like yours, your agent may know that this is simply not the case. Whether it is the other neighborhood, different features or something else, if he or she says that your house is worth less than the reality is you need to go lower on your price.
One of the realities that Realtors encounter is sellers seeing what they want to see. They will try to tell you that the neighbors home down the street is the identical model to their home but theirs is much better because of X, Y and Z. These things they think make their home better are things that don’t mean a hill of beans. The seller proudly tells you they have a shed, a new septic system and a deck that was built with heavy duty nails.
You do your research as an agent and discover this identical home down the street has a new kitchen with granite counters, central air, a brick patio and a 3 season porch. The owner you just met usually conveniently discounts these things in their mind or simply don’t realize they are there. In any event the home down the street is clearly a superior property and worth a lot more than the unrealistic seller you just met with. This scenario is also quite common with for sale by owners who don’t take the time to meet with a Realtor or appraiser to get an accurate value for their home.
I Need a Certain Amount of Money
One of the tough things about having a loan out on a property – much like with an automobile – is that sometimes the amount you owe on the loan outstrips the actual value of your property. And no matter how much you want things to be different, you are still tied to the market when it comes time to sell. You may need a certain amount of money to pay off your mortgage in full, more money than you can actually get on the house right now.
You have two options in front of you at this point. You can go forward with the sale and take the hit, or you can stay in the house and hope for better options later on. What you cannot do is expect buyers to sympathize with you enough to spend thousands of more dollars on your home. In the end they do not care about your financial situation. They want a good deal and will do everything they can to get one – even passing up your home for a less desirable option simply based on its more competitive price.
A buyer cares about one thing – paying what the home is worth not some delusional value based on someones unrealistic desires.
Zillow Says It’s Worth This Much
This could actually be the most amusing of all the crazy reasons sellers give for wanting to overprice their home. Folks lets get on thing straight – you have a better chance of seeing Big foot than you do of seeing an accurate Zillow estimate. Sellers and buyers are equally notorious for using Zillow as a valuation tool when it suites them. The problem is nobody with half a brain is going to rely on Zillow’s accuracy of home value estimates. They can be so far off it is amazing they would want to promote such garbage on an otherwise impressive website.
Another Real Estate Agent Told Me It Was Worth X
Most sellers want to believe the best value they hear for their home. We all love our properties and think what we have is better than the next guys down the street. This of course is not always the case and there are agents who will tell you whatever you want to hear just to get your business. When you are selling your home understanding this one concept is important – data does not lie people do! If every real estate agent but one is telling you your home is only worth a certain amount it stands to reason that they are telling you the truth.
How to Deal With Sellers Who Want to Overprice a Home
The best real estate agents walk away from listings where the seller is completely unrealistic. Unfortunately there are a lot of Realtors that don’t know any better and feel that having an overpriced listing is better than not having one at all. While you may be thinking why would a real estate agent want to have an overpriced listing the answer is a simple one.
They use the home to get business for other properties they may be selling or just to have additional buyer clients. Every home draws a certain amount of phone calls and if you are not a great agent obtaining a listing can help you get buyer calls. Essentially the agent is picking up clients from the advertising of the overpriced home and spinning them elsewhere.
In my mind this is NEVER a good way to do business if you consider yourself as a professional. In fact intentionally overpricing a home just to get a listing is a violation of the code of ethics that Realtors are bound by. Not only is it a poor business practice but as an agent you are creating a situation where a client is going to be dissatisfied. Once that happens your stress level as a real estate agent goes up ten-fold.
In fact sellers will start asking you to do unrealistic things that don’t work like holding an open house every week, putting a big ad in the Wall Street Journal or calling them every two days for a progress update. Of course none of these things are going to cause the home to sell. Want a good laugh? Take a look at the ten ways to know a home is overpriced. This is a humorous look at how to know your home is not worth what you are asking and the things that real estate agents hear from homeowners who are completely unrealistic!
No thanks! Be real – be honest – be professional. Council sellers properly on why it is so important to price their home correctly and don’t be afraid to walk away if they don’t agree. If you are a homeowner reading this hopefully by now you have come to the realization that overpricing a home is not the way to go if you want any shot of getting top dollar for your property.
Other Helpful Home Selling Articles
- Why do real estate agent take overpriced listings via About Home.
- How to sell a home in the fall selling season via Maximum Real Estate Exposure.
- Ten of the best kept secrets for selling a home via HGTV.
Use these additional home selling resources to make your sale go as smooth as possible!
The above Real Estate information on reasons sellers give for overpricing their homes was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at [email protected] or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 27+ Years.
Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!
I service Real Estate sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton and Uxbridge MA.