Deciding to sell your home is big a decision. However your next steps could save or cost you hundreds of thousands of dollars. Keep in mind these two facts when pricing your home:

  1. Sellers' perception of their home value is usually much higher than it actually is.
  2. There are Realtors who will suggest an over inflated listing price to "buy" your listing.

 

Though both these facts are common knowledge they create a dilemma for the seller. Given this, it's tempting to list at a too high price at the recommendation of a Realtor trying to "buy the listing" by suggesting the home is worth far more than market value. The ugly truth is the advantage goes to the listing Realtor and the disadvantage to your pocketbook. How can listing your house too high hurt you? If someone likes your house, they will make an offer- right? Wrong! There are several damages to be done: Consider timing - the worst time to overprice your home is in down turning market. (current trend)

To help illustrate the trend line vs. listing price here is a visual on the chalk board:

When you see the list price plotted in this manner, results from overpricing are clear. If we were in an upward moving market, the home would be on the market for a longer time, but eventually the market will catch up to the price. However in a down turning market the risk is leaving tens of thousands, perhaps even 100's of thousands of dollars on the table because the home was overpriced. In fact even in an upturning market, pricing high is still ill-advised. There is still a very good chance you will miss good buyers willing to pay top dollar for your home. With more homes overpriced than priced correctly, your accurately priced home is a beacon to buyers. You now stand a chance of getting your price, or more than your price, IE. multiple offers - over bidding the property! Not to mention the whole process is a lot less energy on your part (fewer showings and opens = less cleaning and having to leave your home) and there is the risk of becoming a "stale listing" coupled with the emotional turmoil of all the negative feedback.

Be aware, setting a high price in a down turning market is by far the bigger mistake. These sellers are missing opportunities from buyers who will not even enter a home priced hundreds of thousands over their budget. Buyers become few and far between in this market and the overpriced house misses the opportunity all together, in fact it stands a good chance of not selling at all. Although sellers understand this, it's so tempting when a Realtor gives them an over inflated price. Some are even flattered by this.

Previously reported in the Market Brief, Vancouver's sales peaked May 12th (as per the bi-weekly spread sheet) though the signs were there at the end of April. Some properties overpriced at that time still have not sold and now perhaps won't sell unless they are drastically reduced to a price level well below what it should have originally been listed at.

Moral - Abandon your personal point of view. Buyers don't care how much you paid for your home, how many memorable moments you and your family shared in the home, or how much you need for your next purchase. Make sure you get the facts and make a decision that makes sense. It will save you 100's of thousands of hard earned dollars.

Here are some examples: