When it comes to selling your home, one of the most important decisions that you will have to make is setting the price at which your property should be marketed and listed. It’s a delicate balance between achieving the maximum amount versus not being able to sell your property and having it go "stale" on listing websites. If your house fails to sell for a many months because it is overpriced, then you will probably face an uphill battle to sell it - even at a price that reflects its true value.
Many Estate Agents will quote an inflated price for your home, just to win the listing. At Aspire, we will not do that. We will tell you what we think your home is worth and we will agree a marketing plan with you to achieve the maximum price in the shortest time period. Here are a couple of good reasons why you should be careful if considering listing your home at an amount above its true market value.
Time to sell - it goes without saying that if your property is overpriced, it will probably take longer to sell. According to data from Zoopla, homes that are overpriced can take up to two months longer to sell. You might think that it is worth the wait, but read on ......
Missing the initial “buzz” – properties receive the most attention during the first couple of weeks after being listed. If you are going to benefit from multiple offers that could drive up the price, it is likely to happen in this period. An overpriced property will not normally benefit from the initial interest and buzz that new listings tend to attract.
Buyer perception – the longer a property is on the market, the more likely that buyers will become “wary” of it. Buyers will start to wonder “what’s wrong with it, why hasn’t it sold” or “I wonder if there have been problems with the survey”. As buyers become increasingly wary, they tend to reflect this in lower offers. There is a lot of psychology involved in selling a property and it's good to understand what a buyer will be thinking and the emotions they will be going through.
Price reductions – if you fail to sell, then you will have to consider making price reductions. Keep in mind that buyers will see details of price reductions on certain listing websites. Any property showing a couple of price reductions will also raise buyer suspicion.
Cheeky offers – Properties that have been on the market for a considerable period of time and have price reductions tend to attract “cheeky” offers. Buyers might think that you are getting desperate to sell and therefore make a lowball offer.
Changes in market conditions – unfortunately house prices do not always go up. Even in a rising market where house prices rise to the extent that your home becomes more appropriately priced, you still need to deal with the negative perception of being sat on the market for a prolonged period. A worse scenario is that the market dips during the period that you are listing and you will be forced to “chase the market down” with multiple price reductions.
Mortgage valuation – even if you do manage to secure an offer, if the property is being purchased with a mortgage, it will still need to pass the lenders valuation. This can be particularly tough in a slower or falling market were lenders tend to become more cautious in their valuations. Remember that the fall out rate after offer (i.e. the amount of properties that receive offers but fail to complete) is 40%.
Missed opportunity – if you have found a new home and the purchase is contingent on the sale of your property, keep in mind that the sellers won’t wait around for ever. When you make an offer to purchase, the sellers agent will evaluate the strength of your offer and if they feel that your home is overvalued they will advise their client accordingly. Remember also that any mortgage offer that you have received could expire if your purchase is delayed because you can’t sell your home. That could lead to further application fees or a change in mortgage terms originally agreed.
Every seller will wish to maximise the price achieved. However, rather than over pricing the property, a better strategy might be to work with your agent to create as much initial interest as possible in your home. Your best chance of “pushing the price” is to find two or three people in the first couple of weeks who are interested in your home and are willing to “bid it up”.
