When you are getting ready to put your home on the market, there is one mistake that can not only cost you money, it can cost you a sale! This mistake is overpricing your home. Yes, overpricing can hurt how quickly, or even if your home sells at all and here is why:
Your Home: May Get Stale - If you start with too high of a price, your home may sit on the market way longer than it should and it causes it to get "stale". When bread hits that point it has been around a while (but there are no outward signs of mold) we start to question whether we want a sandwich or not. So we leave it alone even longer. We figure we might eat it as toast, but, then toast never sounds good. So there it sits until we finally pitch it. I know it sound silly to compare this to a home sale, however, it works the same way. If a home has too high of a price, it will sit. Those who would normally love it don't want to mess with it because even though it "looks okay" on the outside, you never know what issues a home could have and if it's at the top of their price range already, they won't risk it. (Who wants crumbly dry bread for a sandwich?!). There may be those who can afford it, but, if they are going to pay a certain price, they expect certain things and if they can get those things elsewhere for a better price, they will. So a perfectly good home will sit. The longer it sits, the worse it gets.
Your Home: May Get a Reputation - Which brings me to my next point--if your home sits a long time with no offers, even if you have a lot of viewings, it will start to get a "reputation" to those who are looking for a home. They will ask themselves, "why has such a nice home been on the market so long?" When people start to wonder, all kinds of things can come to their minds, like: it must need a lot of costly repairs, the sellers won't work with anyone, or even that it has an infestation of one thing or another! Crazy, I know, but people think the worst when something doesn't sell fast. They think if it's a good deal, then it "won't last long"! You then may lose some who would normally look (and maybe even pay your TOO HIGH price) but don't because they don't like the "what if" questions they have, so they pass it by for another home that is newer on the market.
Your Home: May Drive Away a Quick and Easy Sale - Another thing you can miss out on (while waiting for that extra pay day you think you will get) is a buyer who has either great credit (or cash) who needs that home NOW and wants a "good deal". Even if you miss out on some extra cash up front, if it sells right away (and closes right away) that is money in your pocket NOW. Have you ever heard the saying "A bird in the hand is worth 2 in a bush"? What that means is having a sale right now is better than waiting for a sale that might never come. The longer your home sits, the price may decrease anyway and you may become more desperate for that sale. That means you may accept any deal even from someone who has issues getting their financing to go through, or another that has a lot of obstacles to go through before they can close the deal which means more waiting after you have had to wait months (or years in some cases) before you home sells.
Your Home: May Hurt the 'Hood - One other thing you may not think of is, if you list your home over market value on the front end, unfortunately you may get less than market value on the back end than if you had priced it correctly in the first place. When that happens, it may impact the value of the other homes in the neighborhood for their future sales. So if your home was worth $150,000 but you sold it for $130,000 then your neighbor who had a comparable home to yours may not be able to get the $150,000 out of his home either because of your lower sale.
Your Home: Will Be Too Much Trouble - I am sure you have heard that it is a "seller's market" because the inventory of homes is low and the demand is high. This tempts sellers to increase their prices more than they should. However, today's buyer wants a "turn key, ready to move in to" house and they don't want to take the time to negotiate a bunch to get it. If it's not ready to go and priced right, they are going to move on.
These are just a few reasons not to overprice your home. Talk to an experienced Realtor to find out what the fair market value is on your home. They can explain to you what is considered in the task of comparative market analysis and what really doesn't matter in the pricing of a home. Some things you may think is worth a lot of money when you sell a home and it might not be, so it's good to ask help from an expert. (Pssst--I know a few people who could help you out with that!) --Jen Lush