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If you’re thinking of selling, you may run the risk of overpricing your home. From Zestimates to banking on what one neighbor’s home sold for, it can be tempting to overprice your home based on what you might make. But this can come at quite a cost. Learn about five common challenges that come with overpricing your home.
1. Missing the mark with potential buyers
If your home is overpriced, potential buyers will not run across your listing in their home search. While they are searching based on a specific price point, your home at the higher price point will stay off their radar. With today’s interest rates and rising home prices, buyers are cautious about staying within their budgets.
In addition, the buyer’s real estate agent will know the local market. If a buyer’s agent believes a home is overpriced, they will not want to waste time showing it to clients.
2. Deal with buyer financing problems
Even if you do find an interested buyer for your overpriced home, the buyer will most likely require financing. Lenders require an appraisal on the value of the property to ensure they are not distributing a loan for more than the home is worth.
If the appraisal comes out below asking price, the buyer will need to either make up the difference in cash or risk the bank being unable to finance the loan. That final financial toll could be the last straw and cause a buyer to walk away from the deal.
3. Spend more days on the market
Overpricing your home will result in the high probability that your home will spend more days on the market. The combination of less visibility for qualified buyers and less agent effort towards showing overpriced homes, could result in less showings. That, in turn, will lead to less offers. The longer the home sits on the market, the more buyers question why that’s the case and may steer clear of it.
4. Forced to do price reductions and eat extra costs
To drum up offers and interest, some sellers of overpriced homes have to do a price reduction. This can have positive and negative effects. On one hand, reducing the price should make it visible to more buyers at the proper price point. However, the price reduction could cause a buyer to wonder if there are issues with the home since it’s been listed for a long time.
Furthermore, you as the homeowner are still responsible for the upkeep of the home during this time. Mortgage payments, utilities, cleaning and yard maintenance are still your responsibility. They can eat into the profits of the eventual home sale, along with the price reduction.
5. Expect lowball offers
An extended time on the market coupled with a price reduction (or multiple price reductions) are prime targets for buyers to give lowball offers. As the seller, you may be forced to accept the lower offer out of desperation or because the interest has waned so much on the property. You run the risk of this lowball offer being even worse than if you had listed the home at market rate from the start.
Steps to take to avoid overpricing your home
There are steps you can take to ensure you do not overprice your home.
1. Use a qualified real estate agent
First and foremost, find a qualified real estate agent to sell your home. Pricing your home correctly for the local market is a crucial part of the home-selling process. Windermere Silverdale’s team of experts are here to help. They’re highly rated, know Kitsap County’s real estate market, and have top tier inspectors, home stagers, photographers, and more.
2. Get a free Comparative Market Analysis (CMA)
Your real estate agent will be able to accurately price your home for sale by evaluating similar properties. This is called a Comparative Market Analysis (CMA). The report will look at properties with similar features (square footage, bedrooms, bathrooms, etc.) that have sold in your area. Using data from the CMA should ensure your property is priced properly, and you’ll be able to make data-informed decisions to achieve your goals.
3. Complete home upgrades that add value
The CMA could also uncover upgrades that would be worthwhile prior to listing the home. If you don’t have the cash up front to invest in home remodeling projects prior to selling, check out the Windermere Ready program.
Working with your real estate expert, you can decide which home upgrades will add the most value to your home before it goes to market. Strategically preparing your home for sale is one of the best things you can do to get your asking price.
