When Should Your Home Price Be Higher Than the Market?

Setting your home’s selling price above its actual market value may seem like a great idea…right?

You have room to deal with buyers who like to bargain aggressively. Plus, your agent can comfortably take his or her percentage without compromising what you’ll receive from the sale. Sounds like a win-win situation, right?

Well, the process of property-selling goes deeper than that. A well-maintained house that has been priced competitively from the get-go is more likely to sell within the higher end of its value scale. It is also expected to get off the market in a relatively shorter period of time.

Conversely, an overpriced house is more likely to stay on the market longer than expected. And, the longer it stays on the market, the lower its final selling price ends up. This has been observed in homes that typically lingered on the market for more than two months; homes like this tend to sell for at least five percent less than its initial selling price.

Of course, there are a number of things that contribute to the time a house spends on the market. However, the initial price has proven the be one of the most influential factors in determining the time to closing.

When it comes to home pricing, agents know best. 

As a homeowner, your house is your first and foremost concern. As such, this results in you having limited knowledge of the world beyond the borders of your own home. It is because of this limited view of the market that some homeowners have a tendency to overvalue their property. In many cases, they place emphasis on upgrades that have little value to a buyer.

There is a common misconception that real estate agents severely undervalue houses to sell and get them off the market as quickly as possible. While unscrupulous agents do exist, most are concerned with making sure your house is accurately priced according to current market conditions.

With this in mind, it’s important to be receptive to your agent’s advice on how to prep up your home for a sale. Potential buyers often respond to a listing within 7-10 days after posting, so making it attractive from the start (e.g. pricing) increases your chances of having a quick sale.

As the popular saying goes, “First impressions, last.” The same rings true for your house listing price. 

Take advantage of the early momentum when you first put up your house for sale. An overpriced listing that is inactive for weeks often ends up having its price reduced until it reaches a point that is more in tune to what the market perceives its value to be.

Buyers are more likely to strike if the listing reaches around five percent of their desired price. However, if the house takes too long to go down to its ideal price range, buyers get disinterested. It is likely their offers will be far below what one would have received with a correctly priced listing.

If you have any more questions regarding appropriate pricing, please leave your info in my contact form with your questions. Or if you are looking for the value of your own home, visit our home valuation tool. And finally, if you’re looking for tips to help make your real estate experience easier, please check out the rest of my real estate blog!