It is very common for sellers to want to try overpricing their property slightly, to see how the market responds. The idea is that you try out the higher price, in hopes of getting a good offer early on. We have seen this strategy work! We have also seen it fail miserably! The honest truth is that it is a known RISK.
When properties are overpriced, they run the risk of becoming a stale listing. Here’s what happens.
1 – The buyers who would be interested in your property are priced out of it. They never see the listing, or see it and decide that while it conforms to what they are looking for, it’s priced dramatically higher than the other properties they’ve been viewing.
2 – Local agents fail to show the property to their clients because they see that it’s overpriced or out of their price range. If Realtors do show the property, they become less excited about selling it to their buyers because it does not represent a good value for their buyer’s financial investment.
3 – As a seller, at this point, you may recognize that your listing isn’t getting enough showing activity or offers. You decide now is a good time to lower the price. This can have a positive effect by exposing new buyers to the property since it may now be in their price range. However, by this point, the property often gets a subtle reputation that it’s not a good value, or that you, as a seller, may have unreasonable expectations that aren’t worth dealing with.
4 – The property, at this point, is considered stale. After it’s been on the market for a few months, most active buyers have seen it, and often it seems that no amount of marketing or exposure will change their first impression of the property. Remember, buyers make a decision about a property within seconds.
This doesn’t mean it will be impossible to sell your property once your listing is stale, or that your property won’t sell at your higher price right out of the gates – just remember that you run the risk of getting a stale listing, which usually end up selling slightly undervalue. Also, the hassle of hosting showings and keeping your property paid and kept up during the months while it is for sale can prolong the process and make it more difficult.
As your representatives – we are happy to try to help you to sell your property for whatever price you want to list it for. It is not our job to tell you what price to choose. We do, however want to offer our expertise and assistance in making this decision!
If you feel that pricing your property high to try out the market is the best strategy for you, then we ask you to consider also including price structuring as part of our listing agreement, to help keep your property active and attractive to buyers.
Price Structuring is a listing technique where we build a plan, in advance, to deal with price drops after starting a property with a high list price. This plan is entirely negotiable, and usually factors in activity on the listing, such as the number of showings or offers and Agent and Buyer feedback. If you think you want to try the market at a high list price, lets discuss Price Structuring for the success of your sale.