What is the cost of overpricing a home?
Fair market value is the price a qualified, reasonably knowledgeable buyer is willing to pay, which a seller, not under duress, is willing to accept after the home has been properly exposed to the market.
Neither agents nor sellers determine market value: Only the market itself – willing and able buyers – establishes value. A comprehensive comparative market analysis is the best way to estimate current fair market value prior to listing the home for sale. We then work with the seller to create a plan – pricing, preparation, and marketing – to maximize the conditions that reliably achieve the highest possible sales price.
The vast majority of buyers will not make offers on homes they consider significantly overpriced. Either they don’t want to waste their time or are uncomfortable with possibly “offending” the seller. They simply move on to listings they consider fairly priced.
Well-priced homes create a sense of urgency in the buyer/broker communities to act quickly with strong, clean offers, and often lead to competitive bidding between buyers –which is the most likely way to increase sales price.
Overpricing wastes the optimum moment of buyer attention: When it first comes on the market. This moment cannot be recaptured.
So what is the cost to home sellers of overpricing?
The average loss in value seen in price-reduced homes –was about 10%. Certainly, this differential varied widely amid tens of thousands of individual homes in varying circumstances of sale, but considering home prices in the Bay Area, even a small percentage decline in sales price typically adds up to a substantial loss in seller proceeds.
Have questions about your home's value? Reach out for a customized comparative market analysis!