If you’re fortunate enough to be selling your home in a “seller’s market” where homeowners are getting multiple offers on their homes and they’re selling quickly, you could make a nice profit. When homes are selling well, some homeowners who believe they have a real gem on their hands will price their home above the going rate because they’re convinced there will be a buyer ready to pay it.
If your home is in a coveted neighborhood, and you’ve made considerable upgrades, why not start with an asking price above the going rate? There are a number of reasons why this isn’t a good idea. Let’s look at a few.
Having your home on the market too long is risky
If your home is priced higher than comparable ones, potential buyers may opt to look at others first and then forget about yours. The longer it stays on the market and the more price drops it has, the more people will assume there’s something wrong with it. They may also assume you’re in a hurry to sell, so they start with a low offer.
Homes have the most showings in the first month, so if your house is on the market longer, your chances of selling it decrease. Even if you eventually lower the price, you’ve missed those people who were looking earlier.
If the home is priced higher than the appraised value, it will affect financing
Even if you find a buyer who’s willing to pay your asking price, they may not be able to get the mortgage they need. Lenders approve mortgages based on a home’s appraised value rather than the sale price. That means the buyers will either need to use more of their own cash or you’ll need to lower the price.
Keeping your home on the market for a long time is stressful
Even if you’re not in any rush to sell your home, how long do you want to put up with your real estate agent showing it? That means making the beds every morning and keeping everything neat and tidy in case your agent gets a last-minute showing. How long do you (and your family) want that?
Having sound legal guidance before you list your home for sale through to the closing and final signing of all the documents can help you avoid costly and time-consuming issues.