8 Reasons Not to Set a Home Price High
By Laura Agadoni
One goal when you're selling your house is to get as much money as possible. It can be tempting to overprice. There's always a chance you might score big. Right?
Technically, yes. But that doesn't mean testing the market by setting your home's price above what the house is worth is a good strategy. In fact, there are many reasons not to test the market this way.
1. You won't get offers (but your neighbors might).
It's great to be a good neighbor, but unintentionally sacrificing your sale to help your neighbors sell their homes might be going a bit far.
When you price too high, you're "helping sell the other homes in the neighborhood that have listed for less," says Brad Chandler, a Virginia real estate agent.
After seeing your high-priced home, buyers may be eager to get the better-value house nearby -- even if they liked your home better.
2. You lose credibility.
Buyers are savvy. They've usually done the research and have a ballpark idea of what homes in your neighborhood are worth. When you price too high, people might decide not to even look at your property.
3. Not everyone likes to play "Let's Make a Deal."
A common reason sellers price high is that it leaves room for negotiation. The problem with this tactic? If buyers overlook your house because it's out of their budget, there will be no one to negotiate with.
"While some buyers might enjoy the negotiation process, a solid buyer respects and appreciates a home priced just right," says real estate broker Denise Panza.
4. You're turning people into "yes men."
Some sellers who price high are given false hope by agents who are uncomfortable telling their clients the truth.
"Beware of 'sign agents,'" says Jerry Grodesky, an Illinois real estate broker. What's a sign agent? Some agents may agree to any price you want just to get their sign on your lawn.
Roh Habibi, star of the TV show "Million Dollar Listing San Francisco," says that some agents like the prestige of having a high-priced listing associated with their name.
Instead of listing at the inflated price, Habibi says, he gets sellers to "come to realistic expectations of what the home will likely sell for."
5. You squander the early days.
Sellers are in the driver's seat the first 30 days a house is on the market. The listing is still new, so you have buyers' attention.
The ideal scenario is that you price to sell in the first two weeks, says David Feldberg, a California real estate broker. That way, you stand to get multiple offers.
"When you price a home too high, you waste some of the time [during which] you have the most leverage with any potential buyer," says Feldberg.
6. Your house gets stale.
If your house is on the market longer than 30 days, buyers will start wondering whether something's wrong with it.
"Real estate agents refer to this as a stale home," says Texas real estate agent Sissy Lappin, co-founder of ListingDoor.com. She adds, "When you price your home too high, all you're doing is putting blood in the water for the sharks who will wait until you lower your price."
And here's the real problem: When you do drop the price, you often get less for your house than if you offered a realistic price from the start. California real estate agent Drew Nelson explains that the longer a house sits on the market "translates directly to a larger discount from list price to ultimate sales price."
7. People won't even see your listing.
People generally set up search parameters by price when looking online for a home.
Let's say your house is worth $319,000, but you're asking $330,000. You won't capture buyers who search for houses within the $300,000 to $325,000 range.
"But if the house were priced properly, it would show up in the buyer's search results," says Troy Balakhan, a Florida real estate agent.
"If comparable home sales over the last six months and current market conditions don't support your sales price, then your buyer won't get the mortgage," explains Lawrence Sanek, a Florida real estate agent.