"Overpricing a home does not increase the probability it will sell for more" 

 

There are actually 6 disasters that occur when a listing is overpriced, the most important being that your home will sell for less than if it was priced appropriately:

 

Time

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Imagine yourself in two months time, your home still isn't sold even though it has been over a month, you've had dozens of showings and all the homes around you have sold at or above asking price. You're frustrated and do not understand why your home still isn't sold despite it being seen by every potential buyer in the area. 

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This is why, when your home first goes on the market, it should be very appealing and at a price point similiar or even better than comparable homes in your area. If your home is not priced correctly, it may be ignored, or worse, noticed by buyers and placed into the "not worth it" category.  

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Now imagine more time goes by and it is now 6 months later and the market has completely changed, forcing you to take a price much much lower than what your home could have sold for when you first listed. This is the first problem with overpricing a listing and this is why a home must be priced corretly in order to be appealing when it first comes to market. 

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Stress

 

Keeping your home in show worthy condition is a lot of work, even if your home is usually neat and tidy. Your home must be in pristine condition in order to attract the highest paying buyers. 

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Clean floors, carpets, windows, kitchen, bathrooms, getting rid of clutter, landscaping etc all must be maintained for your listing to shine. Would you really want to do all of this everyday for six months? Especially, when you could sell your home for more in the first two weeks than you would after 6 months. There is no need for all of this work, stress and constantly wondering when someone will want to view your home. 

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Selling your home should be fast, easy, stress free and profitable and not a single one of these is possible if your listing is overpriced. 

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Mortgage Payments

 

Every month that goes by, means more money that your putting into a house that you will never get back. Even with a low interest rate, you could lose hundreds if not multiple thousands of dollars in interest payments that most homeowners overlook when they go to sell their home. 

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With an overpriced home, there is no negotiating up and month after month if there are no takers you are losing more and more money. 

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When you price it right, you have all the negotiating power as you will have lots of interest, you cherry pick only the best offer and sell it fast and for top dollar. 

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Negative Perception

 

A shift in the buyers attitude that causes serious headaches and loses you a significant amount of money. 

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The longer your home sits on the market, the worse the perception becomes. As a home creeps farther and farther past the average selling time/DOM in the area, the less a buyer will want to pay, the less interest there will be in your home and the more "low ball" offers you will receive. 

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When your home first goes on the market, it receives the most attention and it will be considered by a number of buyers so long as the price is comparable or superior to others. 

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Low ball offers are frustrating and even upsetting, you know that your home was worth more than these offers but they see you as an easy target and are ready to take advantage of you. Low ball offers can be avoided by pricing your home advantageously which will generate significant demand, attention and dollars. 

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Appraisal Problems

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Even with an offer, you could still be in trouble. Sometimes you may get lucky and a buyer will agree with your optimistic price if they see something special about your home. 

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However, in order for the buyer to get a mortgage, a bank will require a home appraisal. The appraiser will use prices of homes that are comparable and have sold near yours. If your price is too high, not only can it cause a delay but it can actually result in a lender that will not provide a loan on the property. 

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As you can imagine most buyers won't be eager to shell out more money once the bank decides that the home is not worth that much. 

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Distribution Problems

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Pricing your home too high can result in hundreds and even thousands of potential buyers not receiving or viewing your listing. 

 

Most buyers use the internet as their initial search for a home, even though your listing will be on hundreds and even thousands of sites it could still not be seen by the most likely buyers. As you likely know, searching online involves imputting a set criteria, if your home is outside of their selected price range than they will never see your listing and you won't have anyone to negotite with even if you were willing to sell for less.