The Drawbacks of Overpricing
- Reduces Activity: Agents won't show the property if they feel it is priced too high.
- Lower Advertising Response: Buyer excitement will be with other properties that offer better value.
- Loss of Interested Buyers: The property will seem inferior in amenities to other properties in the same price range that are correctly priced.
- Attracts the Wrong Prospects: Serious buyers will feel that they should be getting more for their money.
- Helps the Competition: The high price makes the other look like a good deal.
- Eliminates Offers: Since a fair priced offer will be lower than asking price and may insult the seller, many buyers will just move on to another property.
- Causes Appraisal Problems: Appraisers must base their value on what comparable properties have sold for.
- Lower Net Proceeds: Most of the time an overpriced property will eventually end up selling for less than if it had been properly priced to begin with, not to mention the extra carrying costs.
Sometimes, sellers who have their property overpriced refuse to reduce their asking price by stating that a buyer could always make an offer. The fallacy here is that buyers don't make offers on property they have not seen and they won't consider the property without competitive pricing. Sellers have to be in the ball park to play the game!