Pricing Your Home

Pricing Pyramid

How you price your home will directly impact upon how many buyers, showings and offers you attract, and ultimately to how easily it sells. At the pyramid's center is the fair market value at which a reasonable percentage of buyers would view and purchase your home. When you underprice your home you'll attract a greater percentage of buyers, and when you overprice it you'll attract a lesser percentage of buyers.

The Consequences of Overpricing

The strategy of overpricing your property -- knowing that you can reduce the price later -- might make sense at first glance. However, it seldom works. In fact, sellers who overprice their properties -- even just 10% above market value -- often end up getting less than they would if they had priced it properly from the start. Here is why:

  • A high price on your property makes other comparable properties more attractive, so you actually help to sell your competition.
  • Fewer buyers will respond to ads, fewer agents will show your property to their buyer clients, and you'll get fewer serious offers.
  • Inflated prices often lead to mortgage rejections and critical lost time waiting for finance approvals that don't go through.
  • Reducing the price after buyers have begun to perceive your home as a "stale" listing will not generate nearly as much interest as if you'd priced it properly from the start. This is why rightly pricing your property to coincide with its window of maximum market exposure and buyer interest is so important.