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Let’s face it, most people are house proud. We think our house is done up the best way and would love to believe that our home is all the neighbors’ envy. So when it comes to selling this dream property, most of us make the mistake of setting the price of the house, which in all likelihood is unrealistic which in turn prove to be a deterrent in our efforts to sell it.
Overpricing a real estate is the direct result in our over-estimating the value of the property, which is again biased by our strong emotions. Unfortunately, the buyer does not feel that there is anything so ‘special’ about the house, which justifies the high price. Overpricing thus, not only wastes our time but money too.
One of the first steps you ought to take to avoid the mistake of over pricing is to have an unbiased and objective view about your property. See it the way a buyer would. A good idea is to seek the help of a professional real estate agent. These professional people are aware of the existing market trends as well as past market scenario. Thus they can give you a more realistic idea of the asking price for your property. If you study very closely the trends in your neighborhood, you will realize why some properties sold overnight and why some are still unsold after months of advertising and publicity. According to expert realtors, the best time frame to sell your property is within a month of its announcement in the market. When you set a price which can not justify it self, most buyers will overlook it and go to somewhere else. Thus many opportunities seem to by-pass your home. Other important reasons why overpricing kills the prospect of real estate sales are:
- Buyers are always looking for the most affordable rate. Especially if the market of your neighborhood is tilted more towards the buyers (more property, less buyer) then buyers have more option to choose from. Also buyers who are hinging on the price borderline usually get intimidated by the high price.
- You lose out on time. You will keep on waiting till all the similar-priced houses are sold till a buyer comes in. in the meantime, more houses in the similar or less price bracket enters the already-crowded market.
- When a property is up for sale for a long time, buyers get suspicious as the property starts to get ‘stale’. This results in sellers getting desperate and selling the real estate at below normal prices.
A high priced home makes it necessary for many buyers to seek financial assistance from a lending institution. This will entail an appraisal and evaluation of the value of the property. When this results in a low price for the appraised property, this might affect the loan sanction or a mortgage denial. Buyer thus is unable to buy the property, which brings you back to the situation where you began – losing out on time and money in the mean time.
As a general guideline, many realtors suggest that it is unwise to set the selling price above 5% of the market average. Sometimes even this 5% may also be too high depending on market situations. |
