The Danger of Overpricing your Home

 

I received a call from a buyer telling me that he read in a local online paper that a house on a desirable street in Palo Alto dropped in price. He was wondering if this I true in this market. Well the answer is yes a house in Palo Alto on a desirable street had a price reduction. The fact and the matter is that even in Palo Alto and in our competitive market, an overpriced home will not sell unless the list price is in line of the fair market value.

While some sellers are tempted to list their property at a high price and test the market or negotiate down the price, this strategy often has the opposite result. As the house stay longer on the market the house develop a stigma that there is maybe something wrong with the house and thus is not selling. The seller will start get lowball offers and end-up eventually selling at a lower price than the fair market value.

Seller be cautious, ask your agent to prepare a market analysis and price your home in line with the mid-range of the comparable, in this market it is safer to underprice than overprice your home. Visit open houses, this exercise is the most vivid way to get a reality check about what you’re up against and what your home’s strengths and weaknesses are compared with the other homes buyers will see. If your home is underpriced you most likely end-up receiving multiple offers and the house will end –up selling at its fair market value.

This strategy never fails when the market is hot and is far better than overpricing your home and having it sit on the market for longer time. The consequences of that are usually drastic. Seller will have to show the house for longer period of time, reduce eventually the list price later and selling the house at a less than market value.