Common Real Estate Myth: Overpricing your home initially, so you can renegotiate or lower the price later
This is one of the most common mistakes a homeowner can make when they are ready to put their property on the market.
It seems like a logical approach: I want to price my home at a number that I would never actually expect to receive, so I can have some room to negotiate or lower the price later down the line. That way, I can find a buyer willing to pay my real asking price as time goes on.
Unfortunately, doing so will actually hurt the homeowner in the long-run for several reasons:
You want to gain attention from buyers the minute your listing hits the market
When adding a new listing to the market, the attention a home can receive during the initial weeks are crucial. A home that remains on the market for a long period of time is going to create suspicions for the buyer as to why it hasn’t sold yet. They may assume the home has something wrong with it or there is a bigger reason it has not sold.
Potential buyers within your price range will miss the new listing
When someone is looking to buy a new home, they usually come with a set budget in mind. Think, I want to spend X-amount of money, without going higher than X. Potential buyers are going to miss your listing if the asking price is not reasonable and within their budget. Also, real estate agents and their buyers are looking at the market value of similar homes; an agent may spot the too-high price and avoid the property until the asking price lowers.
Keeping your home on the market for a long time is risky
Every buyer is going to ask their agent how long the home has been on the market. In general, your offers are going to get lower the longer your home is on the market. This relates back to the first point: buyers are going to start asking what has taken the home so long to sell, is there some larger underlying problem with this property? You want to price the home correctly from the very start to increase your chances of selling the home.
Leaving room to negotiate may hurt you in the longrun
Negotiation is a fundamental part of the sales process. As a seller, it’s understandable that you want to get the most for your property. Your real estate agent will be prepared to negotiate on your behalf to get you the best possible price for your home. That does not mean you should price the property significantly more than it’s worth, even if you think negotiating will create some kind of middle-ground between seller and buyer.
Be sure to ask your realtor to create a Comparable Market Analysis (CMA) Report to suggest an appropriate price or price range before your listing hits the market.