When it comes to selling your property, setting the right price is crucial. While it may sound wonderful when your real estate agent gives you an inflated price to where the market is, the reality is doing so can result in significant financial losses in the end. It’s ok for the agent though, they’ve already secured your business and can then start hitting you with price reductions to align back to where the value actually sits in the market.
I’m not saying pricing your property to give it away by any means! There are key strategies to marketing a property that creates the most buyer competition and in turn increase the probability of a higher offer. At the end of the day, you hire a property agent to get you the very premium buyer who’s willing to pay the most in the market for you.
Here are some of the ways that overpricing your property can hurt the end sale price:
Fewer Potential Buyers
Overpricing your property can lead to fewer potential buyers. Buyers are often well-informed about the current market value of properties and will have a good idea of what your property is worth. If your property is priced too high, many potential buyers will simply overlook it and focus on other, more reasonably priced properties.
Longer Time on the Market
With an overpriced property, it’s not surprising that it might hang around the market for a while. Unsold homes are the least attractive to buyers, which decreases viewings and stifles potential earnings. On top of this, the cost of holding onto a property – such as mortgage repayments, taxes and maintenance – can accumulate when there’s no sale in sight.
Lower Offers
Overpriced properties may still receive offers, but these are likely to be lower than what you are asking. Buyers may think that they can negotiate the price down and get a better deal. This means that you will have to consider lower offers or risk having your property sit on the market for even longer. Additionally, if your property stays on the market for an extended period of time, buyers may become more aggressive in their negotiations, leading to even lower offers.
Valuation Issues
When it comes time to settle the sale, the buyer’s lender will require a valuation of the property. If the Valuer determines that the property is overpriced, the lender may not approve the loan, or the buyer may try to negotiate a lower price based on the appraisal. This can further delay the sale and result in a lower final sale price. Additionally, if the appraisal comes in below the agreed-upon sale price, you may have to reduce the price or risk losing the sale altogether.
Conclusion
Overpricing your property can lead to fewer potential buyers, a longer time on the market, lower offers, and valuation issues. All of these factors can ultimately lead to a lower-end sale price, eroding your potential profits and resulting in significant financial losses. To avoid these pitfalls, it is important to work with a knowledgeable real estate agent who can help you set a realistic price for your property based on current market conditions and comparable sales in your area. By setting the right price from the start, you can increase your chances of a successful sale and maximize your potential profits.
