Selling your home is a big deal, and pricing it right is one of the most critical steps. But let’s face it—many sellers overprice their homes, thinking it’s a smart move. The truth? Overpricing often backfires, leaving your property sitting on the market and, worse, selling for less than it could have. Here’s why it happens, how it hurts your chances, and what to do instead.
As the saying goes, "To fundamentally solve a problem, we must understand its root cause." See if any of these sound familiar...
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Emotional Attachment
Sellers often overvalue their homes because of the memories and personal significance tied to the property. They see their home as unique and may struggle to separate its emotional value from its market value. -
Misunderstanding the Market
Many sellers assume their home is worth more than comparable properties, especially if they’ve made upgrades. They might not realize that market conditions or buyer demand ultimately determine a home’s worth. -
High Expectations from Upgrades
While renovations can add value, not all improvements have the return on investment sellers expect. For example, a remodeled kitchen may boost appeal, but it doesn’t always justify a significantly higher asking price. - Online Valuation Tools
Online tools like Zillow’s Zestimate are helpful, but they’re not gospel. These algorithms can’t account for the unique features of your home or the nuances of your local market. Much like your country tax appraisers that often don't have access to the interior or even the backyard of a home, they don't have all the information needed to make an accurate assessment.
A licensed agent provides a more accurate comparative market analysis (CMA), ensuring your price aligns with what buyers are willing to pay today. For the most accurate and official home value assessment, seek out a licensed appraiser who can create a report for a fee.
- Leave Room To Negotiate
Some sellers overprice intentionally, believing it provides room for buyers to negotiate. However, this tactic can backfire, deterring buyers who see the price as unrealistic or in some cases out of their budget. -
Pressure to Recoup Costs
Sellers may price their home high to recover what they paid for it, plus any additional costs like renovations, mortgage payments, or property taxes. Unfortunately, the market doesn’t take their expenses into account. -
Bad Advice
Sometimes, sellers receive poor guidance from inexperienced agents or well-meaning friends and family. This can lead to inflated pricing that doesn’t align with the home’s actual market value
How Overpricing Hurts Sellers
Your Home Sits on the Market
An overpriced home tends to linger on the market. The longer it stays unsold, the more skeptical buyers become. They may wonder:
- Is something wrong with the property?
- Why hasn’t anyone else made an offer?
This leads to a vicious cycle where the property becomes less desirable simply because of the time it’s been on the market.
Repeated Price Drops
Eventually, sellers realize they need to lower the price to attract buyers. However, price reductions send a negative signal. Buyers might think:
- The seller is desperate.
- The property is worth even less than the reduced price.
Frequent price drops weaken your negotiating position and erode buyer confidence in the value of the home.
Fewer Offers, Less Leverage
Ironically, homes that start out overpriced often sell for less than if they had been priced correctly from the beginning. Why?
- Buyers feel emboldened to make lowball offers.
- The pool of potential buyers shrinks as the home becomes less competitive.
The National Association of Realtors (NAR) reports that homes priced correctly tend to sell faster and closer to the asking price.
Wasted Time and Money
While your home lingers on the market:
- You’re still paying for mortgage, utilities, and maintenance.
- You may miss out on opportunities to buy your next home.
- You could lose momentum in a hot market where well-priced homes sell quickly.
This visual demonstrates the impact of homes sitting on the market for extended periods:
- Final Sale Price (% of Original): Homes lose value the longer they stay on the market. Those sold within 0-30 days retain 98% of their original price, while homes listed for 91+ days drop to 85%.
- Buyer Interest Level: Buyer interest plummets as time on the market increases, from 90% interest in the first 30 days to just 30% after 91+ days.
How to Price It Right (and Win)
Use a Comparative Market Analysis (CMA)
Work with a real estate agent to review comparable sales in your area. A CMA provides an accurate picture of what buyers are paying for similar homes and helps you price yours competitively.
Start at Market Value
Listing at market value attracts more buyers, creates buzz, and often leads to multiple offers. When buyers feel the home is fairly priced, they’re more likely to compete, which can drive up the final sale price.
Consider Timing and Market Conditions
Houston’s real estate market is influenced by seasonal trends. Spring and early summer are prime selling seasons, while the holidays and hurricane season tend to slow things down. Pay attention to these patterns when setting your price.
When's The Perfect Time To Sell Your Houston Home?
Final Thoughts
Overpricing your home might feel like you’re setting yourself up for a bigger payday, but it often leads to fewer offers, longer market time, and lower final sale prices. Pricing it right from the start is the smartest move you can make.
Stay tuned next week when we discuss, "Proven Strategy for Maximum Profit (Not Recommended For Everyone)"
