4 Common (but Terrible) Reasons for Overpricing Your Home
We know, we know—you love your house. The kitchen is the perfect size, your weekly summer barbecues give your neighbors patio envy, and your ’70s-style conversation pit is totally coming back into vogue—as you knew it would.
You’ve seen the comps for your neighborhood, but you just know your home is worth more, so you’re going to list it at a higher price.
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This is one of a few reasons why sellers overprice their home, and none are smart. If you price your home too high, it’ll take longer to sell, raising doubts in buyers’ minds about whether there’s something wrong with it, and you’ll probably have to drop the price eventually anyway.
So don’t fall for any of these five common justifications sellers use to inflate the price of their beloved property:
1. You have the Midas touch in decor (you think)
The reason that interiors are often painted white or neutral colors before a sale is that that allows potential buyers to envision what colors would make it their home. Your colorful touches might not be for everyone, and can actually devalue your house.
RELATED: To Sell Your Home Think Like A Buyer
Recently an Agent listed a home for a client whose bathrooms were all sorts of strange colors—olive-green toilets, a purple bathtub, and a pink sink. Agents need to be honest with you at all costs – pun intended. But when it was recommended to the seller a price that factored in the cost of necessary updates, things got a little heated.
The owner was upset and argued that the colorful fixtures added value, because people are tired of the all-white, stale hospital look.
So we tried the seller’s way first, listing it for his desired price. It didn’t sell, and buyers gave feedback that the home was overpriced. After weeks on the market, the seller finally agreed to lower the price. It sold within 2 weeks.
2. You’re nitpicking comps
Comps (or comparable market analysis) are valuable reference points that allow you to compare your home to similar nearby homes in order to price it right. But some sellers place too much value on ultimately negligible differences between their home and the comps.
Recently an Agent received the following feedback from a seller; “My home has a 60-gallon hot water heater; every other home has 40. My deck is 60 feet larger. My den has real barn wood paneling.”
While small features like this might be worth pointing out to potential buyers, they are not going to make or break a deal – and trying to price your home based on the size of your deck is a setup for disappointment. Plus, you might not see the flaws in your home – your deck might be big, but it might also need work.
We don’t want to be a downer; by nature, we see life through rose-colored glasses. Sadly, it can cost you when it comes to selling your home.
3. You’re too focused on your ROI
A house is an investment, and everyone wants a return on their investment. Couple that with emotional attachment, and you’re primed to mark up your home’s value.
We often find Sellers think that their house is worth what they want or need to sell it for, but the harsh reality is that a home is worth whatever a buyer is ready, willing, and able to pay for it.
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Even in a seller’s market, there’s no guarantee that you’ll make money on your house. And just because you need $500,000 to buy that house in Shark River Hills doesn’t mean you can sell your house for the same amount.
4. You’re imagining you’ll haggle
Perhaps the most common reason people overprice their home is because they’re looking to negotiate.
On paper, it sounds like something you’d see on “Pawn Stars.” You offer up a vintage silver tea set at an inflated price. Rick Harrison offers you 25% of that, but he eventually goes up to 30%.
OK, maybe “Pawn Stars” is a bad example, but you get the idea: You price your house 10% higher, fully expecting a buyer to try to lowball you, netting you the price you wanted all along while the buyer walks away thinking he got a bargain.
It doesn’t work like that in real estate.
It’s much better to price it right and create such interest and demand where buyers are chasing you, versus you chasing the market backward [and] searching for the demand.
RELATED: The Importance of Proper Pricing
So don’t be afraid to price your home fairly, or price it based on your Agent’s advice. This is what will attract buyers and boost the price to where it should be.
Ultimately, everything sells when it’s priced right.
FREE DOWNLOAD: Your Ultimate Home Sellers Guide
Did you recently sell your home? What experience did you have when it came to proper pricing? Are you currently selling? What are your proper pricing observations?