An overpriced home discourages prospective buyers from making offers when the difference between the asking price and the market price is substantial. In other cultures around the world it is more common to write low offers. In America, if a listing is very overpriced buyers will just steer clear of it.
If you have been on the market for a month or two and have not gotten an offer of any kind, chances are your price is too high. Of course, market conditions have to be taken into account. When the market is dropping it can be painful to realize a loss, but it might be better to take a small loss now as oppose to a greater loss later. In a rising market, it might be to your benefit to price higher than the comps because buyers may be willing to pay more because they are anxious to get into something after losing out on multiples on other properties, or feel a sense of urgency that they missed the best time to buy and the longer they wait the more prices will go up.
Buyers do their homework, especially with all the information nowadays that is at thier fingertips. They probably know what you bought the property for, how long you’ve had it, what other comparable properties in the neighborhood sold for and the “zestimate”. Even if the Buyer is new to the market, chances are thier agent knows.
Pricing your home correctly is most crucial in a stable market. This is because the most exposure and attention your property will garner is the first two weeks after it is put on the market. This is when the large pool of active buyers, who are looking to buy in the next 30 days will see your property for the first time. Once they have seen your property and passed it over, the only new buyers you will get is new buyers entering the market, which will come in a trickle.
Buyer’s Agents lose interest in the property if they view it as overpriced. They won’t share it with their clients via email or phone, won’t show it to their buyers (if they don’t think the property is sellable why would they show it?) and they may even discourage their buyers from seeing it, if their clients find the property online and send the listing to the broker asking for his opinion. Properties that sell are priced correctly, properties that sit on the market and eventually expire are overpriced. Everything sells.
Another thing to consider, is that if you drastically overprice your house, the wrong buyers are going to look at. Whenever I hear a buyer with a huge spread in their price range, I tend to think the gravitate towards the lower bound. Any true buyer would not consider a property substantially less value then what they are comfortable buying. You are going to be going up against properties in better condition, or larger, or in a better location (that’s why they are worth more). The higher price range buyers are going to complain about this thing and that thing because they expect more for the price. An interesting thing happens when the price is right. All the complaining stops, and offers start coming.
Custom Homes, Unique Homes, High End Homes, take on qualities similar to fine art. In some cases the sales prices for these special properties can far exceed what a comparable market analysis would suggest because there isn’t anything comparable. What it comes down to- is pricing is determined by what a willing buyer and a willing seller agree.