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.