Accurately pricing your home is critical for a successful sale. While aiming for the highest possible price might seem logical, there are pitfalls to overpricing your home, especially in the current housing market.
“Buyer pools are tightening because of the high interest rates. This means homes not priced competitively are unlikely to sell unless the seller reduces the asking price or market conditions change, which is improbable now,” warned Adrian Goslett, the regional director and CEO of RE/MAX of Southern Africa.
He said inflating the asking price would lead to complications that deterred potential buyers and prolonged how long it would take to complete a successful sale.
“It is important to understand these risks so homeowners can make a more informed decision around the asking price that should, hopefully, lead to a smoother and more successful sales process,” he noted.
When a home is priced significantly above its market value, Goslett said it discouraged potential buyers from considering it.
“Most buyers begin their house hunt online. When searching for homes on property portals, buyers will search within a certain price range, and if your home is priced above that range, it will not show up in their search results,” he explained.
This means the home will stay on the market for longer.
The longer it is on the market, the more buyers will think there is something wrong with the property, which will often lead to cheeky offers later because buyers think the seller must be desperate to sell after all the time on the market.
Goslett said overpriced homes also lose their new-to-market appeal.
“When a new listing hits property portals, buyers who set alerts for that suburb will log in to see what’s new to the market. If the price is too high, the seller might miss out on some of this initial surge of potential buyers actively looking for new listings,” said Goslett.
Buyers were also spoilt for choice now, meaning they had many options to compare value.
“If your home is priced much higher than comparable properties with similar features and in the same neighbourhood, buyers are more likely to opt for those lower-priced alternatives,” said Goslett.
Many sellers also assumed buyers would offer less than the asking price. The problem is that when the asking price is too high, Goslett said that rather than encouraging negotiations, it deterred serious buyers from making an offer because they assumed the negotiations would not bring down the price to a reasonable level.
“This limits a seller’s chances of receiving any offers at all,” he warned.
The key to avoiding these downsides is to price the home correctly from the start of the sale.
“Although it might not be what they want to hear, sellers need to be realistic about the current market conditions and lean on the advice of a trusted local real estate professional to ensure their home sells for full value,” Goslett concluded.
