80% of potential buyers will view your home in the first few weeks of it being listed. If your price is too high and you must lower it, most of your market has moved on, and it is hard to get them back.
The listing price is a key component of the valuation and sale of a property in the marketplace. The closer the list price to market value, the more likely that a higher sale price will be realized within a reasonable period of time. A list price at or close to market value will attract the most number of serious buyers. A heightened demand will usually translate into a higher selling price.
Simply put, a buyer, upon seeing a well priced property, will become anxious to make a good offer before anyone else realizes the property's excellent value. As a result, it will be the seller and not the buyer who will be able to negotiate from a position of strength. Therefore, under normal circumstances, it is very likely that the buyer will pay top price to get the property before anyone else does.
While there are no absolutes concerning listing prices, it is generally recommended that the list price be no more than 2-4% above the estimated value or value range. Of course you should also look at your competition in determining the proper listing price.
Often, sellers misunderstand the process of determining a listing price. You can often hear them say "Let's list the property 10% higher just in case we get lucky or We need to list the property 10% higher to leave room for negotiations." In both cases, a listing price 10% higher than the market value could very well be overpricing the seller's property. If the list price is indeed too high, then the seller's property will probably be eliminated by serious buyers who otherwise would have considered buying it. In fact, serious buyers may either not look at the property at all or will use it to justify buying another property that is much better priced in comparison.
Of course, the buyer may still make an offer on an overpriced property. However, in these situations, it is the buyer that will be in the position of strength in the negotiations as he/she will be aware that they will not be in competition for the property.
Some sellers will counter the argument that the listing price is too high by saying, "you can always lower the price later." The problem with doing this is that the property will, after some time, suffer from the problem of market staleness. As the weeks drag on, fewer and fewer buyers will look at the property. Buyers will often ask how long the property has been on the market for and be very suspicious of a property that has been listed for a while.
In the end, the result is often that an overpriced property is on the market way longer than necessary and the price received is generally lower than it would have been it if had been listed realistically in the first place. |