"The initial excitement fades When your home first hits the market, there's a window of opportunity where it generates the most buzz. Buyers and agents are always on the lookout for new listings, and if your home is priced competitively, it will attract a lot of attention. However, if the price is too high, many potential buyers might skip over it entirely, assuming it's out of their budget or not a good value. This means you miss out on that initial surge of interest, which is crucial for a quick and successful sale."
"Stagnation and price reductions Homes that are overpriced tend to sit on the market longer. As days turn into weeks, and weeks into months, buyers start to wonder why. They might assume there's something wrong with the property, even if there isn't. This can lead to your home becoming "stale" on the market. When you eventually have to drop the price, it often signals to buyers that you're desperate to sell, giving them leverage to negotiate even lower."
"The appraisal hurdle Even if you find a buyer willing to pay your inflated price, you might face another hurdle: the appraisal. Lenders require an appraisal to ensure the home's value supports the loan amount. If the appraisal comes in lower than the agreed-upon price, the buyer's lender may not approve the mortgage for the full amount. This can cause the deal to fall through or require you to reduce the price significantly, leading to frustration and delays."
Overpricing a home reduces initial buyer interest because many buyers and agents filter out high-priced new listings. A competitively priced listing attracts more attention and benefits from an initial surge of activity. Overpriced homes tend to sit on the market longer and can acquire a reputation for problems, making buyers wary. Subsequent price reductions signal urgency and hand negotiating leverage to buyers. Appraisals can come in below an inflated sale price, jeopardizing mortgage approval and collapsing deals or forcing significant reductions. Overpricing can also exclude ideal buyers who search within specific price ranges, narrowing the buyer pool.
Read at Redfin | Real Estate Tips for Home Buying, Selling & More
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