Selling? Our latest research shows that overpriced homes stay on the market for longer. Here’s a wider look at the pitfalls of being over-ambitious with your asking price.
Putting your home on the market with a realistic price tag is the first step to securing a timely sale.
Here’s our list of nine reasons not to overprice your home based on our latest data, a bit of industry know-how and a good dose of common sense.
1. Your property could take longer to sell
Homes that are overpriced can take more than two months longer to sell compared with accurately priced properties, according our data.
Homes that had been reduced from their initial price when listed on Zoopla, took longest to sell in Blackburn at an average of 91 days – 64 days longer than properties in the area with a realistic price tag.
The situation was similar in Oxford and St Helens, with homes that had to be discounted taking 62 and 61 days longer respectively to sell than local homes that were realistically priced.
The extra time it took an overpriced property to sell ranged from an average of 68 days in the North East to 49 days in the West Midlands.
2. Fewer buyers will see your home
Most buyers use property websites like Zoopla to kick-start their search for a new home – and one of the key search filters is the maximum price you want to pay.
As a seller, if you price your home too high, it is likely to appear in fewer searches and bypass many potential buyers.
It may also compare unfavourably to homes listed in the same price bracket that have been realistically priced.
And that’s a big chunk of the market according to separate research we carried out which shows homes in England and Wales are currently achieving an average 96% of asking price.
3. Buyers can be suspicious
While it may be tempting to test the water with a high price, reasoning that you can always discount it later if your home does not sell, this approach is likely to trigger suspicion among potential buyers.
People tend to be wary of properties that have been on the market for too long, assuming there must be something a wrong with them.
Bear in mind also that price reductions are noted next to the home for sale on property websites.
4. You can store up problems further down the line
Even if you find a buyer at an inflated price, it may still cause problems later.
The buyer is likely to have a valuation survey carried out by their mortgage lender – and if it returns a value significantly below the offer you have accepted, the buyer may either try to negotiate a discount or even pull out of the sale altogether.
5. You can waste your chance of a first impression
Buyers prefer properties that are fresh on to the market, rather than those that have been listed for some time – and you only get one chance to make a first impression.
If you price your home right, you may have several buyers interested at the beginning, which could push up the price naturally if it progresses to a bidding war.
If your home is priced too high, you may not get this interest in the first place.
6. You risk alienating the estate agent
When selling what’s likely to be the biggest asset you own, you need your estate agent to be fully invested in the job. But you risk alienating them if you price it above the amount they recommend.
Unrealistically priced properties are hard to shift, and they reflect badly on estate agents, as it could be assumed they are the ones who have mispriced it.
7. The market may change
Sellers who overprice their homes risk the local property market changing while they wait for it to sell.
Homes that have to be discounted can take up to two months longer to sell – and with heightened uncertainty and slowing economic growth – that could be enough time for the local market to shift down a gear.
If house prices in your area start to fall while you wait, you may find yourself having to discount your home by more than would originally have been the case.
8. You run the risk of losing the home you want to buy
If you have already had an offer on the home you want to move to accepted, you risk losing it if your current property takes too long to sell.
Property chains can be long and complex and not everyone will be prepared or able to wait for you to get your target asking price.
What’s more, mortgage offers only tend to be valid for three months – and if you exceed this period while holding out for a high sale price on your existing home, you may have to apply again costing you additional fees and causing further delays.
9. You may be hit with higher estate agency fees
Given the longer time it takes overpriced homes to sell, you may decide to instruct a new estate agent in hope that they will be more successful in finding a buyer.
Whether you commission a new agent to the one you’ve got or switch agents completely, you could be exposing yourself to double fees.
That’s because many estate agents carry a clause in their contract stating that commission is still payable on the sale of a home they represented, even if they did not broker the final sale.