We get it—you love your house. Your floor plan is unique, your interior design is exceptional…
You’ve seen the comps for your home, but you just know it’s worth more, so you’re going to list it over the market price.
This is one of a few reasons why sellers overprice their home, and none of them is smart. If you price your home too high, it’ll take longer to sell, raising doubts in buyers’ minds about whether there’s something wrong with it, and you’ll probably have to drop the price eventually anyway. So don’t fall for any of these five common justifications sellers use to inflate the price of their beloved property.
1. You have the Golden touch in decor (you think)
The reason that interiors are often painted white or neutral colors before a sale is that that allows potential buyers to envision what colors would make it their home. Your quirky or colorful touches might not be for everyone, and can actually devalue your house. Homes with overly customized interior design usually take much longer to sell and usually sell for less than seller’s asking price, as most buyers would factor in the cost of updates to fit their taste.
2. You’re nitpicking comps
Comps (or comparable market analysis) are valuable reference points that allow you to compare your home to similar nearby homes in order to price it right. But some sellers place too much value on ultimately negligible differences between their home and the comps. Such as the home’s balcony size, Interior decor, and sunlight exposure.
Small features like this might be worth pointing out to potential buyers, but they’re not going to make or break a deal—and trying to price your home based on the size of your balcony is a setup for disappointment. Plus, you might not see the flaws in your home—your interior decor may be perfect for you, but not for most buyers.
3. You’re too focused on your ROI
A house is an investment, and everyone wants a return on their investment. Couple that with emotional attachment, and you’re primed to mark up your home’s value.
Sellers think that their house is worth what they want or need to sell it for, but the harsh reality is that a home is worth whatever a buyer is ready, willing, and able to pay for it.
We have seen several occasions where the seller rejected an offer at our suggested price, then ended up selling it for much less than the original offer 6 months later.
Listings that received multiple offers and sold for more than listing price for less than 30 days on the market are usually the ones that were priced correctly at or a little below market price. In the Downtown LA market, the days on the market is double for listing priced just 1% over market price, as reference in the chart above.
4. You think you have to haggle
Perhaps the most common reason people overprice their home is because they’re looking to negotiate.
On paper, it sounds like something you’d see on “Pawn Stars.” You offer up a vintage silver tea set at an inflated price. Rick Harrison offers you 25% of that, but he eventually goes up to 30%. OK, maybe “Pawn Stars” is a bad example, but you get the idea: You price your house 10% higher, fully expecting a buyer to try to lowball you, netting you the price you wanted all along while the buyer walks away thinking he got a bargain.
It doesn’t work like that in real estate.
It’s much better to price it right and create such interest and demand where buyers are chasing you, versus you chasing the market backward [and] searching for the demand.
So don’t be afraid to price your home fairly, or even underprice it—which is likely to attract buyers and boost the price to where it should be. The average property value of listings in Downtown LA dropped 5% after being on the market for over 120 days.
Everything sells when the price is right!