No matter how big or small, how beautiful or well-furnished a home, setting the right selling price is what matters most when one sets out to sell it. While it may tempt the seller to set a high price, the fact is that overpriced homes come along with several hidden risks. Overpricing a home can backfire by reducing the genuine buyer’s interest and by being stuck in the market for a longer duration. Overpricing real estate consequences can also add stress and lose your negotiation power.
Join us in this blog as we discuss the top 10 risks of overpricing your home.
Top 10 Overpricing Home Risks
Every homeowner wants to get the best possible price when selling their home, but setting an unrealistic price tag can do more harm than good. Here are 10 major risks associated with overpriced homes:
- Creates a Negative Impression: If a home is priced significantly higher than comparable properties in the area, it may come across as an unrealistic deal for potential buyers. Hence overpricing a home becomes one of the most common real estate market pitfalls giving a negative first impression can be difficult to overcome, even if the price is later reduced.
- Decreases the Serious Buyers’ Interest: There are buyers who set out to search for homes with a specific budget in mind, and if they find your home overpriced, they will instantly move ahead to other options that are in their range. Even those who do consider it may quickly lose interest when they realize they can get more value for their money elsewhere.
- Get Stuck in the Market: Another risk associated with overpricing your home is that you get stuck in the market because of a high price. Not everyone is interested in buying overpriced homes, so these properties take time to sell and stay in the market for weeks, months, and even years. Eventually, sellers may have to lower the price to attract the buyers.
- Costly Carrying Expenses: Another hidden risk of an overpriced home is that it incurs costly carrying expenses. Wondering, what does that mean? Well, every single day a home remains unsold, it costs the owner some expenses in the form of property taxes, mortgage payments, utility bills, and maintenance costs. These additional expenses can add up significantly over time, reducing the overall profit when the house finally sells.
- Losing Out the Negotiation Power: Many buyers won’t even bother viewing an overpriced home, assuming that the seller is unwilling to negotiate. In other words, pricing home too high gives the impression to the buyers that there is no scope for negotiation. Proper pricing from the start can help maintain strong negotiation power and attract competitive offers.
- Emotional Stress: Wrong pricing home mistakes can also lead to emotional stress. Remember that selling a home is not like selling a cake. It can soon turn into a stressful process, and what can add most to this stress is overpricing. Watching others selling their homes quickly and yours still lingering on the market can be disheartening and stressful.
- Stale Listings and Price Reductions: When discussing the overpricing real estate consequences, you must also note that such homes require multiple price reductions to attract buyers. Each price drop somehow signals that the seller is desperate to sell even at lower offers, although the price is set higher. This leads to stale listings and buyers assume there must be something wrong with the property or deal. Contrary to this, a home priced right from the beginning has a better chance of selling quickly and at a fair market value.
- Market Decline Risk: One shouldn’t forget that real estate markets fluctuate frequently and in such a scenario, an overpriced home may take more time to sell and eventually face the risk of declining market conditions. Moreover, if the value of the home drops during the listing period, the seller may have no other option other than asking for a lower price to sell the home.
- Chances of Attracting the Wrong Buyers: The reason why right home pricing strategies are important is because if done in the wrong way, you may attract the wrong buyers. Let us explain you further, generally, a buyer expects an overpriced home to be furnished with all the luxury features. So, when the buyer actually visits the property and finds these features and amenities missing, he/ she quickly loses interest in the property. Contrary to this, buyers who might actually be interested in your home might consider other options if your home is overpriced. This mismatch in expectations can make it harder to find the right buyer.
- Appraisal Issues: Lastly, even if a seller manages to find a buyer willing to pay even if the home is overpriced, the deal may fail due to the appraisal process. This turns out to be one of the common selling property challenges because lenders usually require appraisals that a home is worth the agreed-upon price before approving finances for the same. If a home fails to appraise for the asking price, the buyer may have trouble securing a loan, which may force the seller to sell at a lower price.
Home valuation errors such as overpricing a home can be a big risk for the seller. Hence, it is important to price a home correctly to secure a successful and timely sale. An overpriced home can lead to prolonged market time, costly carrying expenses, fewer offers, and various other real estate market pitfalls that we discussed in this post. To avoid these pitfalls, research the market, work with a knowledgeable real estate agent, and set a competitive yet realistic price. By doing so, you increase your chances of selling quickly and at the best possible price.
FAQs about Risks of Overpricing Your Home
Should I lower my price if my home isn’t selling? Yes, if you are finding it hard to sell your home in the market at the current selling price, you must lower the price. This is because the current price might be too high for the potential buyers.
How long should I wait before reducing my price? Generally, buyers are suggested to reassess the home pricing after getting no response for one to two weeks of being in the market.
Will overpricing affect my ability to buy a new home? Yes, overpricing a home may impact your ability to buy a new home, especially if you are relying on the proceeds of the home to finance your next purchase.
What impact does overpricing have on my real estate agent? An overpriced home is often harder to sell and market, which can in turn strain your relationship with your real estate agent. He or she might find it difficult to negotiate effectively on your behalf with a potential buyer.
What should I do if my home isn’t selling at the current price? In case your home is not selling at the current price, consider reevaluating the price, improve your listing photos and description, and expand your marketing efforts.