Can’t we simply list high and just come down later?
The short answer: I wouldn’t recommend it.
The strategy of overpricing your home when you list it, knowing that you can reduce the price later, might seem like a smart idea at first glance; however, it seldom works. In fact, sellers who overprice their homes – even just 10% above market value – and then reduce the price one or more times often end up getting less than they would have if they’d priced it more realistically from the get-go, as depicted in this Sale Price To Time-On-Market diagram.
Here’s why it doesn’t work:
Fewer buyers, even if they’re attracted to your home, will respond to the ad if they know the house is overpriced. Think about it like this: How many times have you not purchased a great pair of shoes because you knew the store was asking too much for them? Same goes for houses. Even fewer agents will waste their time showing your home to their buyers if they know it’s overpriced.
The right buyers (i.e. folks looking to buy a home like yours) may never even view it because they limit their search to a lesser price range where yours should be.
The wrong buyers (i.e. folks looking in your price range) won’t be interested in your home, having viewed other homes truly worth what you’re asking for yours. Your house may be lovely, but it probably doesn’t hold a candle to some of the others out there.
An excessive price on your property makes others more attractive, both those priced where yours is, and also those priced where yours should be.
You’ll get fewer, if any, serious offers overall because potential buyers may consider doing so a waste of time.
Even if you do get a serious offer, the excessive price can lead to a mortgage rejection for the buyer once the lender has a professional appraisal done on your home and determines it’s overpriced. This leads to critical time lost waiting for finance approvals that never go through. Not to mention it can be frustrating for the potential buyers.
Reducing the price after buyers have begun to perceive your home as a stale listing will not generate as much interest as if you had priced it properly from the start.
The Bottom Line
Realistic pricing is strategic pricing! All this is why pricing your home realistically from the beginning – to coincide with its window of maximum market exposure so that you can best leverage buyers’ interest and emotions – is important, particularly in a market like this one. If you play your cards right, you’ll not only attract more buyers, you’ll attract the right buyers: qualified, motivated, and willing to pay top market value for your home at the very time during the listing when you’re most likely to get it.