Your thinking as the seller is to test the market with your over priced home. The market is hot and inventory is low so what do you do if you are a new seller to the market? Like many excited sellers, you price your home higher than market value. You know that when you do get an offer it will be lower than your asking price. If you price it at fair-market value, the offer will instinctively come in lower. Great strategy right? Wrong! What is fair-market value? That is what the market says your home is worth. This is what other homes in the area have sold for. Real estate giant Zillow agrees that overpricing your home is a bad idea!
Allow me to explain why an over priced home is a bad strategy. When your home is over-priced, fewer people will look at it. Today’s buyers are much better informed than yesterday’s buyers were. There are so many tools at their disposal to analyze the market. I am seeing many over priced homes on the market. I see buyers placing offers on these homes and the home does not appraise for the sellers asking price. When the home does not appraise there are three options. One, the seller can lower the sales price to the appraised value. Two, the buyer can make up the difference between the sales price and the appraised value. (This does not happen often). Three, the buyer moves on to find another house.
The market has slowed some, which it usually does in the fall. Another reason the market has slowed is buyers are getting frustrated with over priced homes and giving up on finding a home. Frustration sets in when the appraised value is lower than the sales price. The seller will not reduce the price on their over priced home so now the buyer is out four to five hundred dollars for an appraisal. They can also be out four hundred more on a home inspection. This is a “lose-lose situation” for everyone. The seller lost a sell, the buyer did not get the home they wanted. Many times the seller will become frustrated and fire the real estate agent.
The seller will hire a new real estate agent. Guess what the first thing is they will most likely do at that point. DROP THE PRICE! If only your house was priced right from the start. Buyers will know that the house has been on the market for a while and wonder what is wrong with it. Why has the house not sold? Thus, in the end the seller will most likely sell for less money. When pricing your home at fair-market value you will most likely get a lot more activity. More showings could translate into many offers. When you get more than one offer at the same time, it can push your sales price higher. This will net you the seller more money. You will not have to make another house payment. Finally, you can move on to your new home. When you go from seller to buyer, are you going to pay for an over priced home or fair-market value? For more home selling tips to sell your home fast in any real estate market.