5 Wrong Reasons to Overprice Your House
Listing your house over the current market value for it is a poor decision, but one that many homeowners make. You may have heard of homes that sell well over asking price, but this does not happen because the seller started out asking more than the house was worth on the market.
There are many reasons why sellers overprice their homes and these are five of the worst:
- You Think Your Décor is a Plus – It has been proven time and again that buyers like to see homes that have neutral tones and that they can easily move their own personal items into. However, there are sellers that think their sense of décor adds value to the home.
If your home has been decorated to your liking to the extent of unusual color fixtures and finishes, you may think you have added value, but a buyer may see a lot of updates that need to be made. Increasing the asking price based off your decorating style is a surefire way to price yourself out of the market. There is a slim chance you will actually find a buyer that has your exact sense of style.
- You Aren’t Taking the Comps Seriously – It is true that no two houses are the same so you have to be careful to make sure that the comps you are using are close. However, nitpicking comps will not help you in setting an accurate listing price. Things that can make a difference between your house and a comp are number of bedrooms, number of bathrooms, square footage, floor plans, size of lot and amenities.
Elements that will not make a difference between your house and the comps are things like slightly larger patio, larger hot water tank, or a bigger refrigerator. If you are breaking down small things like this to justify raising your asking price, you will end up with a house that sits on the market.
- Return on Investment – It is good to make necessary upgrades to your house before listing it; however if you are trying to increase your asking price to get a good return on investment you are making a mistake. Buyers are not taking your investment into consideration when deciding what your house is worth to them. What you owe on your house will not dictate what your house sells for; the market will.
- You Built the House – Homeowners that put their own blood, sweat and tears into building a house are more emotionally attached to the house, and because of this they believe the value it greater than it is.
- You Are Leaving Room to Negotiate – In many markets it is common for vendors to start with a high price because they expect sellers to haggle the price down. However, real estate is different. If you choose a higher listing price you may actually price your house out of the search queries that potential buyers are doing. Buyers may not even see your house to try to offer a lower price.
There are many reasons why sellers overprice their homes when selling. The main reason is emotional attachment. Buyers do not have your memories of the house so if you include these in the value for your home you are going to price yourself too high. Buyers are looking at the physical eliminates of your house and they are basing what they will pay for it off of what the market is dictating at the time.