It goes without saying that everyone selling a property wants the sale to bring them a reasonable price, otherwise they would be donating the property instead of selling it. And people generally expect an outcome that is fair for all parties and understand no one wants to leave money on the table. Most people, that is, but unfortunately not all. This can be especially true of someone selling their home or property. The problem arises when a seller gets a bit too ambitious (and sometimes downright delusional) about what they imagine their property is worth. In this irrational state of mind, fueled by rumors of what someone down the street has supposedly sold their home for, the seller instructs their realtor to list the property at too high a price. And then, against the realtor’s better judgement, they list the property at the price they know full-well to be unreasonable. After all, it is the seller’s decision to make.
In the world of real estate this is a common, and sometimes a costly, mistake. But why you may ask? Why is it a mistake to just test the waters with an ambitious price to find out if a motivated buyer can be drawn out? I’ll tell you why. It has been widely observed by those immersed in the world of real estate that overpricing a property can actually result in a lower sales price after all is said and done. Did you catch that? A lower sales price. It’s true. Asking too much up front can actually prevent you from getting the highest price for your property. How? Won’t people just offer a lower price if they feel the list price is too high? Not necessarily. In reality, they will simply never make an offer. When a property is not priced attractively in the first place, potential buyers often merely shut it out mentally before they ever see it. People who would have otherwise toured the home or property, loved it, and ended up making a strong offer, are turned off by the price and never end up seeing the home. They remove it from their list of possibilities and move on to something else. These “would have been” buyers were repulsed by the price before they ever even gave the property a serious thought. If they would have been enticed into actually setting foot on the property, by a reasonable price, they might have been smitten by the property and made an aggressive offer in order to make it their own. But having never seen the property in the first place, they moved on without a second thought.
See how this works? By pricing the property too high in the first place, the seller is actually minimizing the pool of potential buyers. Like many things in life, selling a property is a numbers game. You have to get a certain number of people into the home for each offer you hope to receive. And keeping the number of lookers unnecessarily small is exactly the opposite of what you need to do if you intend to sell the property for the best possible price.
So, now you know what not to do. and probably want to know how to avoid this pitfall. Never fear, I won’t leave you without hope. The solution is simple. Listen to your realtor. Pick a realtor who knows what they are doing and then trust them when they do there research and give their evaluation of the property’s value. Resist the urge to listen to the dancing dollar signs in your head and price the property so as to peak the interest of potential buyers. Some properties are more difficult to sell than others for various reasons and there are many factors involved in how long it will take a property to sell and for how much. But if you listen to the advice of a real estate professional and price the property attractively in the first place, you will be doing yourself a great favor. In doing so you will be making the property attractive to a larger pool of buyers, and more often than not reaping the benefit reflected in the final negotiated price.