The Pitfalls of High Home Prices

You’re ready to sell your home, you’ve looked at current home prices to get an idea of its worth, and now you’re enlisting an agent’s expertise. Optimizing home prices is extremely important when listing your home — and your agent can help! Here’s how.

You’re ready to sell your home. You’ve looked at current home prices, and you’ve decided exactly how much you feel yours is worth, so now you need to find an agent.

Although you spoke to a few, you decided to go with the one who agreed that your home price is the right price, despite being higher than current prices of other homes in the area. Well, there are definitely agents out there who will do that. However, be wary, as they’re “buying” your listing. They’ve done their research and know what the market says your home is worth, but they are appeasing you and your “home price” just to get you to lower it later. “What’s wrong with that?” you think — right? But there are several major pitfalls to overpricing your home. Let’s take a look.

Why It Pays to Avoid Overly High Home Prices

One of the most compelling arguments against overpricing your home is that prospective buyers and their agents will bypass it because of the unrealistic price tag. They won’t be willing to view an overpriced property when there are similar homes on the market priced right in line with what they should be. The longer you sit on the market, the less desirable your home becomes. Even if you eventually drop the price, you’ve lost the initial appeal and flurry of activity that comes along with putting your home on the market. Furthermore, when a home is overpriced compared to the home prices currently on the market, it usually sells for less than it would’ve had it been priced correctly to begin with!

Appraisals Matter, Too

Let’s say there isn’t a lot of competition on the market so you do receive an offer on your home. Unless the buyer is paying cash, they’ll have to apply for a mortgage to buy your house. Part of that process is the appraisal. If your home is priced higher than the market dictates, it will not appraise, so you’re going to need to lower your price to the appraised value or you’ll lose the sale. This puts you back at market value, back in line with the current home prices.

Take Your Agent’s Advice

Sellers almost always have a number in mind when it comes to selling, and that’s OK. But when an agent sits down with you, shows you the market, and gives you all the reasons why your price is too high, don’t dismiss them based on an emotional reaction — especially when they’re showing you the current home prices in your neighborhood. They’re the professionals, and they want to sell your home. The higher the price on a home, the more money an agent makes, so telling you your home is worth less isn’t putting more money in their pocket; they’re just doing their job correctly. The agent that always agrees with your price is more than likely selling you, not your home, which is exactly what you don’t want.

Are you a first-time home seller? Looking for more tips about picking the right real estate agent? Learn more at our seller experience page.

Shana Maitland is a solution oriented, creative thinker focusing on your real estate needs with integrity, drive and determination! Because of Shana's business philosophy she is a multi-million dollar producer for Coldwell Banker.  As an active and knowledgeable member of her community, Shana is here to help you navigate through your next real estate transaction.  Shana keeps flexible and consistent hours, returns calls promptly, and firmly believe that without her clients, their positive experiences and referrals, she would not be here.  Shana is a member of Member of National Assocation of Realtors, Michigan Assocation of Realtors, and Greater Metropolitan Association of Realtors.  She is also President-elect of the Women's Council of Realtors 275 Corridor Chapter.

1 Comment

  1. Scott Sanders
    March 28, 2015

    Very good information. I am very new in real estate and this has been taught from day one of training. When the seller is not willing to price the home at a fair market value, you need to walk away. We are not in the business of listing homes, we are in the business of selling homes. I am going to a listing this afternoon where the price may be higher than market value due to refinancing recently.

    Reply

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