The Risks of Overpricing Your Home?:

Price Matters...Don't kid yourself:

It is no real secret that PRICE MATTERS. When you decide to sell your home, one of the most important decisions you'll be making is your initial listing price. Of course, you want to get as much for your home as buyers may be willing to pay. However, when determining the price, don't make the mistake of overpricing just because you think it could be "worth a try". It's an understandable pitfall, but one that could prove costly if it slows down the sale and/or makes other homes look like a good value as compared to yours.  You will get more money typically from a transaction that happens quickly verses a sale that takes a long time.

No emotional attachment:

One trap many sellers fall into when deciding a price is allowing yourself to be too emotionally attached.  Take all the emotion out of it and remember it is now a house, not a home.  Once you decide to sell, do not look back and try to think of the home you are going to verses the memories etc. that you built in the home you have been in.  After all, your home has been special to you and your family. You've likely made changes and improvements over the years. But you need to ask yourself how important are those changes I have made to a potential buyer? How up-to-date are the improvements?

The market decides:

It is easy to think your home is worth more than your neighbor's or more than the current market may support but generally it is proven that the market bears only what the true value is.   If you overprice your home, you may attract the wrong buyers and there is a risk of not selling because buyers will then compare your home to other homes within the same price range and walk away disappointed with your home. Some of those other homes may have more amenities or be in better condition than what you have to offer and they will notice it immediately since they will look at multiple homes and compare them.  At the very same time, you may eliminate the potential buyers who are shopping for homes priced in the range of your home's true market value since they will be looking at other homes and not yours.

Risks:

Another challenge with overpricing is less initial traffic and diminished interest in the most critical time of the listing…when it is fresh. Generally, a home receives the most activity during the first weeks its on the market. If your home is priced more than similar homes in your market, it may discourage potential buyers who believe they can get a better value somewhere else. In addition, real estate agents tend to have a keen perspective and do not likely show buyers the overpriced properties.  The longer your home stays on the market, the more buyers may begin to reason that there is something wrong with the property.  If no one bought it and it sat on the market, then they may tend to offer less for it since they think that the average consumer they are competing with to buy the property chose to pass it by.

Price high then lower it?:

If you overprice your home with a thought of using a "price it high then drop quickly" type of strategy, you run into a similar risk with buyers thinking that something is wrong with the property, that you are desperate to sell, or that you do not understand it's true value. Eventually the property may sell, but at how much of a loss?  This could be especially bad if you have extended and purchased another residence.  You could then potentially have to cover two mortgages and pay ongoing expenses?

We want all the offers we can get:

Overpricing most certainly will also result in fewer offers.  Just think about it, for various reasons, buyers may feel uncomfortable submitting a low bid when there's a considerable difference between the market value and selling price.   People still feel embarrassed to offer too low and it takes a lot of time and energy to type and formulate an offer for the sake of knowing that the offer may not likely get accepted.  

Don't forget the appraisal:

If by chance you were to receive and accept a bid at an inflated price, your buyer may face financing problems, because an overpriced house will not appraise for the selling price and deals fall apart at the appraisal all too often.  There is a lot of time and energy spend to get to that point and no one wants to start all over, not the seller nor the buyer.

What can you do?:

To protect yourself and have a better idea that you're not overpricing your home, stick to the pricing basics. You may want to hire a real estate appraiser for an objective unbiased estimate which depending on the price of the home could cost you about $350 to know. Then consult with your Realtor or real estate agent who can help you determine true market value based on a comparable market analysis. The appraisal and the determination of the real estate agent should be somewhat the same.  The key is to work with your Denver CO real estate agent to price right and create a strategic marketing plan that creates excitement from the moment your home hits the MLS.

Contact me, I would be happy to help you!:

Don't be tempted to overprice.  Keep your best chance of getting the highest sales price quickly by staying true to yourself and following the basics of pricing accurately.  If you would like to know how much your home is worth on todays market, please call Frank Nuebel at 720-273-3514 to discuss a private consultation and a free market analysis of your property.  You will be glad you did.

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