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Home Sellers - "Right" Pricing Your Home

Nef Cortez

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With the public perception of realtors and other players in the real estate industry suffering under all the negative media coverage, it may be difficult to believe that there are professional and ethical realtors in the marketplace. Rest assured they are out there—doing their best to inform, educate and represent their clients in the current real estate market.

One of the most important things they can do is to inform a home seller about the pitfalls one is likely to encounter when they overprice their home. While sellers have different motivations as to why they want to knowingly over price their home, the following will explain why this is not always in the seller’s best interest.

#1 – Decline in Agent Enthusiasm and Response

In order to satisfy their clients, Buyer’s Agents (realtors that represent buyers) will spend less time showing a property that is overpriced. Before showing the house, most agents will evaluate the house’s data on the MLS (Multiple Listing Service) database. Based on the comparative market analysis that their research shows, they will know definitively that the house is overpriced. If their client insists on seeing the house, they are very like to briefly show the home to their clients but they will include other properties that are appropriately priced homes in their client’s desired neighborhood. As the old adage goes “Time is Money”, buyer’s agents are motivated to get the most money for the time they spend showing houses. They know that satisfied clients will very likely refer them to additional business.

#2 – Decline in Agent Showings

As mentioned previously, Buyer’s agents (realtors that represent buyers) avoid showing overpriced homes because the realtor has access to MLS (multiple listing systems) databases that provide specific facts and accurate data about market value. While they may visit the property themselves which is called “evaluating the inventory” or houses available for sale currently in their market, they may not even mention the property to their clients. In order to maintain their credibility with their clients, they will steer their clients to more appropriately priced homes with a realistic idea of their ability to close the deal.

#3 – Minimizes Offers

Even if a buyer was persistent and interested enough to see your property( because it happened to be in a neighborhood they like, etc. ) they will be less likely to make an offer since the difference between the list price and the market value is substantial. A professional buyer’s agent will inform his clients what the market value of your house should be.

# 4 – Qualified Buyer Exposure

Overpriced houses fail to attract qualified buyers for the reason stated above. You are more likely to attract “looky-loo” buyers who are usually ready to buy six to nine months in the future. While these prospective buyers may be great client leads for the agent, they do nothing for you—the seller.

Overpricing your home tends to drive away pre-qualified prospective buyers from your home and thus the very kind of offers you would be inclined to work with. With so much real estate data on the internet now available such as, and other websites, savvy buyers can often guesstimate how much your home should sell for and thus will make offers on homes that sell at the estimated market value and within their price range.

# 5 – Limits Financing

Financial institutions and mortgage companies finance only a percentage of the real value of the house, which is called the loan-to-value( i. e. the percentage of a property's value that a lender can or may loan to a borrower) and can be, for illustration purposes, typically around 80%. If the house is overpriced, the lender usually will finance a lower percentage, thus reducing the available financing. If you have been lucky enough to get an inexperienced buyer to this point, this is where the transaction can suffer problematic setbacks and potentially “fall out”—the transaction falls apart. If you are not a “motivated” seller, this may not be a problem other than a waste of your time. However, if you were anxious to sell your home this is where overpricing your home can become a disaster.

# 6 – Wastes Advertising Dollars

A house that is unrealistically priced fails to get normal advertising response. This reduces the effectiveness of advertising and results in the loss of advertising dollars.

# 7 – Loses Prospects From Signs

Prospective buyers who learn about the house from the sign usually will inquire with the listing office or realtor regarding the price. They usually get turned off if it is overpriced and do not pursue the matter further—not even to see the interior of the house.

#8 – Less Money For The Seller

Eventually market interest in the overpriced property completely declines and the seller may become desperate and often begins to cut the sales price drastically. In the interim, he or she must bear maintenance and holding costs. The net result is that the seller will get much less than he could have if the house was “right” priced or correctly priced at the outset.

Nef Cortez has been a licensed real estate broker and has held various positions in the mortgage and real estate industry for over 25+ years. Visit his website at for information on foreclosures.


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