As a seller, one needs to evaluate the goal. Do you want to simply list the property for sale and see how the market responds or is the goal to list and sell the property? Our job, as listing agents, is to get the best price and terms for our seller clients. BUT, we can do this only if we have the right tools. When advising on pricing property for sale, we rely on a number of factors, among them, current market conditions, comparable sales, competing listings and our knowledge of the market. We evaluate a property within the context of the market in which it will be listed. We view a potential listing as a buyer would and urge sellers to try to do the same. If you overprice your property for sale it will take longer to sell than if you price it correctly in the first place.
A property has the best chance of selling within the first 7-8 weeks of being listed. Numerous studies have shown that the longer a property remains on the market, the greater the likelihood is that less money will be received by the seller when they finally do sell. Here is what happens if a listing is overpriced (no mater how nice it is): Buyers and brokers dismiss the property and focus on other, more compelling, listings. Why would a buyer pay two million dollars for your home when comparable homes are selling for one million? A property needs to be the best value in terms of what it is competing with in order to sell. If there is no perceived value, the buyer will focus on the best price.
When a property is aggressively overpriced it reduces the response from agents, limits qualified buyers and showings, negatively affects the ability for financing and remains on the market longer. Overpricing even encourages more overpricing as new listings come on the market whose owners compare their property to other listings rather than to properties that have actually sold. Remember – although the Nantucket market is strongly recovering – we have not yet gained back all of the value lost during the recession. To put it another way – average prices are not yet back to the levels of 2004-2005.
And lastly, the one positive about an overpriced listing is that it will help sell those listings that are properly priced!