Setting a listing price that is slightly higher than the last comparable sale and slightly lower than the immediate competition, will bring the highest possible price. The dangers of overpricing are:

1. Minimizes offers

An overpriced house discourages prospective buyers from making offers since the difference between the asking price and market price becomes substantial. 

2. Agent enthusiasm and response

Agents lose interest in property that is overpriced. They do not spend as much time showing the house as they would, if it were priced right. 

3. Qualified buyer exposure

Overpriced houses fail to attract qualified buyers, or attract “wrong” buyers. 

4. Decline in showings

Agents avoid showing overpriced houses in order to not lose credibility with buyers. 

5. Loses prospects from signs

Prospects who learn about the house from the sign get turned off if it is overpriced. They do not pursue the matter to even see the house.

6. Limits financing

Financial institutions and mortgage companies finance only a percentage of the real value of the house. If the house is overpriced, they usually will finance a lower percentage, thus reducing the available financing.

7. Waste of advertising dollars

A house that is unrealistically priced fails to get a normal advertising response.

8. Less for seller

Eventually market interest in the overpriced property completely declines. As this stage is reached, the seller becomes desperate and begins to feel that any offer is better than no offer. In the meantime, the seller must bear maintenance and holding costs. The net result is that the seller gets much less than he/she could have if the house was correctly priced in the first place.

Last updated on January 24, 2012 by Blake Roberts