The Dangers of Overpricing Your Property by Page Properties
All Sellers want the best possible price for their property, but the goal when one puts one’s property on the market is to sell it. Simple. The only, and I repeat, only reason a property does not sell within the first 2 months of listing is because it is overpriced! Sellers the world over have told their agents, “I can always come down in price later.” Or, “Buyers will always offer less than the asking price, so I am leaving room for negotiation.”
Another favourite is, “But my house is so much nicer than all the others at that price.” How about, “I’m not in a rush to sell, so I’ll wait for my price.”
All of these excuses may be true to some degree, but the dangers of overpricing from the start, means that you property will sit on the market, and may never sell.
1. When buyers search for properties online, they put the criteria they are looking for into the search engine, along with their maximum price. If your property is above this price range, it will not turn up in searches and you will get very few viewings. Buyers who do come, will be expecting more from your house, and no offers will result.
2. Overpricing your house helps sell other properties in the area. Buyers will come and view your house, and several others before purchasing. When they compare your house to another with exactly the same features, the other property will seem like a bargain in comparison to your overpriced home.
3. If you do manage to secure an offer on your property at the above market value, this will generally be from a mortgage buyer. Unfortunately, when the bank comes to value the house, it will be valued much lower than the asking price. The result: your buyer won’t get her loan, and your property is back on the market!
4. Eventually, after several months on the market, buyers begin to think there is something wrong with the property, that they had not noticed. Because, remember, the only reason a house does not sell is because it is overpriced. Buyers, however, do not always think like this. They begin to think the property is structurally unsound, or that “prolific” borehole you’ve been advertising, is actually just a hole in the ground that occasionally fills in the rainy season.
5. The most recent reason not to overprice your home, is that ZIMRA is now using the asking price, as seen on the internet, as the true value of your property. So, if you sell your house for $50,000 less than the asking price, you can get a nasty surprise when you come to pay your Capital Gains Tax, and ZIMRA has calculated it on the asking price and not the actual sale price.
Sometimes, this overpricing is not always driven by the seller. Unfortunately, it is the agent who has valued your property above realistic market values. The reason is to “buy the listing”. What’s that? Well, unscrupulous agents who want to list your property, will often tell you they can get more for your property than competing agents. Thus securing a mandate from the ever-hopeful seller.
But, why would an agent do this, if they know the property won’t sell?
1. They simply want more listings on their books, and to beat other agents to the listing.
2. Any properties on their books attract buyers. They will then direct these buyers to more reasonably priced houses, unfavourably comparing your house to cheaper ones on the market.
3. Having their “For Sale” sign outside your property is advertising for them.
4. When they do eventually let you know that, “Oops, I think we may have been too ambitious with the asking price,” it’s too late! The buyers on the market have lost interest, and the unscrupulous agent has made a few sales off the back of your property, so it’s no loss to them.
So, beware the agent who offers a higher achievable price than the other agents!
The first few weeks of marketing your property are the most critical. This is when buyers’ interest is at its highest, and your agent’s enthusiasm for a new listing is also at its peak. A good agent will advise you of what has currently sold in your area and how these properties compare to the features of your property. They will have facts to back up their appraisal. A good agent will tell you honestly what your property is worth, even when it is not what you want to hear. Trust such an agent with the pricing of your home and take advantage of the critical first few weeks of marketing.
Courtesey of Nicky Page-Versfield Page Properties