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According to Hometrack, research shows that overpriced homes stay longer on the market. Here is a detailed look at the downfall of being over-ambitious when overpricing your home.
- Your property could take longer to sell.
Overpriced homes take an average of two months longer to sell in comparison to accurately priced properties. Discounted properties can also put off buyers, as they may feel there is an issue with the property. However, most buyers who are savvy and research how long the property has been on the market and if there has been a reduction on the asking price, may try and negotiate further and sometimes below the actual market price. In essence, you may end up selling your home below market price, due to the initial over-inflated price, when you could have sold it for market value if was advertised at the correct price.
- Fewer buyers will see your home.
Most buyers go online to search for a property, will start on property portals such as Zoopla and Rightmove, where we also advertise our properties, alongside our website and other marketing mediums. If buyers filter by choosing a maximum price bracket, your property will not be displayed as it's overpriced at a higher price bracket.
This will result in your property appearing in fewer searches, and bypassing potential buyers. Another disadvantage is that your property will compare unfavourably to homes that are listed in that higher price bracket at the correct price, resulting in fewer viewings being booked.
- Buyers can be suspicious.
While it may be tempting to test the water at a higher price bracket, with an aim that you could always lower your asking price at a later stage, this can trigger suspicion amongst potential buyers. Most people, tend to be put off by properties that have on the market for an extended period, assuming that there must be something wrong with them.
As mentioned above, a potential buyer may negotiate a further reduction on the lowered property price, and in turn, you may end up selling below market value.
- You can store up problems further down the line.
Say you are lucky to sell your property at an inflated price, this can still cause problems later down the line. The buyer is likely to have a valuation survey carried out by their mortgage lender, who may give a significantly lower valuation of the accepted price. In this instance, the buyer will have to either negotiate a new price or pull out of the sale. This will result in the property having to be listed again, and you may incur additional costs to market your property.
- You can waste your chance of a first impression.
Buyers prefer properties that are fresh on the market, rather than those that have been listed for a long period of time. Marketing your property at the correct market price may gain more interest, and potentially lead into a bidding war, which in turn will push the property price up.
- The market may change.
The property market can change at any time, and this may dictate whether property prices go up or down. With the current economic climate and heightened uncertainty of economic growth, this could be enough to get the property market to shift down a gear. We don't expect this to happen anytime sooner, due to the high demand vs properties in the market scenario that we are currently seeing. However, this trend can change at any time, especially if banks tighten their lending criteria. The end of the Stamp Duty Holiday may in March 2021 may also affect how the property market behaves.
If the market does take a dip and your property is overpriced, not only will it take much longer to sell your property, but you may have to sell at a lower price. In contrast, you could have sold your property at the correct price prior market conditions dipping.
- You run the risk of losing the home you want to buy
If you are moving home and have had your offer accepted, and are relying on your property to be sold, you may risk losing the property you are moving into.
Property chains are very complex, and your seller may not wait for an extended period until you get your ideal asking price or sell your property. Especially if it will take a two to three months, as they may have another property they are moving into at the same time, and the same further along and so on…
Another thing to consider is that mortgage offers are valid for three months only. If you exceed this period while holding out for a higher sale price on your existing home, you may have to re-apply again to get a mortgage approval and may incur additional fees and delays.
Pricing your property at the correct price is essential, as this will give it the best opportunity to sell your property in a short time and at the correct price. If your property gains interest at the beginning, this could also lead to a bidding war, which may, in turn, result in a higher sale price.
If you are considering to sell your property, speak with one of our property experts today who will carry out a full valuation and market appraisal to ensure your property is marketed at the correct price. Call us today on 0116 275 8888.