The cost of over pricing your property

When looking to sell their property, most vendors will request appraisals from multiple Estate Agents. This is important to see what each agent has to offer, to meet the representatives and see if there is a good fit, and importantly to obtain a valuation. In a competitive market, some agents may be tempted to inflate the price in order to secure the listing. In doing so, they tell the seller just what they want to hear. After all, everyone wants the highest possible price when selling what, in most cases, is their most valuable asset.

Even if you are aware that the price is inflated, it can be tempting to start with a higher price, especially if you are not in a hurry to sell. You may think, why not give it a try just in case, and lower it later if needed. It can't do any harm, right? However, there can be several drawbacks to this approach:

1. Fewer Viewings: Most buyers these days search for property using portals such as Rightmove and typically enter a price range. Your property may be just what the buyer is looking for and they may be prepared to offer a price you would accept. However as it appears outside their search window they simply don't see it.

2. Extended Time on the Market: Overpriced homes tend to stay on the market longer on average. When a property remains unsold for an extended period, potential buyers start to question its desirability, resulting in decreased interest and even fewer viewings over time, eventually leading to price reductions.

3. Multiple Price Reductions: Continuously lowering the price to attract buyers can make the property appear stale or less desirable. Buyers might perceive the seller as desperate, leading to offers below the reduced asking price or even low-ball offers due to the property lingering on the market.

4. Loss of Market Momentum: Homes typically receive the most attention in the initial weeks after listing. Setting a high price could cause the property to miss this crucial period of heightened interest. Subsequent price drops might not generate the same level of excitement or competition, potentially impacting the final sale price that could have been achieved with the correct initial pricing.

5. Mortgage Issues: Even if an offer close to the high listing price is accepted, a subsequent mortgage valuation might come in lower than expected. This can lead to financing challenges for the buyer, necessitating a price reduction or even a deal falling through, resetting the selling process. Even if the buyer could still proceed, the lower valuation could affect the interest rate payable and at the very least cause them to revaluate their offer.

6. Buyers' Advantage: Buyers tend to negotiate more aggressively for homes that have been on the market for an extended period. They may use the time on the market to justify lower offers, assuming that the seller is more inclined to accept less.

   
   

In a rapidly appreciating market, these potential pitfalls may be less significant, as prices may catch up quickly. However, any delay in such a market could also mean paying more for your next purchase.

In the long term, starting with an inflated asking price can lead to a frustrating and drawn-out sales process and ultimately a lower final sale price. Potentially missing out on the property you hoped to buy into the bargain.

By comparison, pricing a home competitively from the beginning can create urgency, attract more buyers, and potentially trigger a bidding war that drives up the final sale price.