Right Price for Your Ottawa Home - Over Market Value

Posted on November 28, 2008 
Filed Under Listing and Selling Your Home, Valerie Zinger

Many many sellers want to set a high price for their home and then promise themselves and their realtor that they will consider reducing the price at a later date - if the house does not sell.  God forbid. 

Here are some reasons why listing your house above market value is not a good strategy:

1.  A high price will keep buyers away.  Your wonderful home is just what a buyer wants but not at the price.  The buyer will not put in an offer in case it insults you.  If the offer that the Buyer wants to make appears too low, the buyer is uncomfortable with the thought that their offer may insult you so they will continue to look elsewhere.  Most REALTOR® will tell you that trying to get a buyer to put in this type of offer is one of the most difficult things to accomplish.  Some people will not even look in your home because the price is outside of their MLS® criteria that they have used to screen homes.  Your price has eliminated potential Buyers before they have even seen your home. 

2.  The first people to see your home are often the most serious buyers and a too high price will not have buyers return when there is a price reduction.  The initial flurry of buyers slows down the longer the house is on the market.  It will be a struggle for your REALTOR® to call back all of the initial buyers - even people who have put in a low offer and been refused - when you finally decide to lower the price.  In one case, over 60 people toured an overpriced home, when the price was reduced twice, only one person was still in the market.  Real potential buyers were lost when the price was too high.

3.  Too long on the market.  Most buyers ask their REALTOR® how long a house has been on the market.  This gives them an indication of problems with the house or with the price (otherwise the house would have sold).  Too long on the market and buyers don’t want to buy a “picked-over”.  In addition, owners start getting weary of always having their home in show home condition.  The state of cleanliness and orderliness may start to deteriorate.  

4.  Signs of greed and then desperation.  A price that is set too high looks to buyers like greed and then, when there are one or more price reductions, the buyer starts to think that desperation has set in for the seller.  Some buyers do not want to be a player in either setting.  

5.  The REALTOR® sign on the lawn starts to look old.  Okay, this is from my perspective but I want the neighbours to think that I can sell homes.  If my sign is on your lawn too long, everyone who goes by on a daily basis is going to start thinking that I have failed to bring you an offer and sell your home.  I want to sell your house and to make you and your neighbours think positively about my skills. 

6.  Fishing - not really selling.  Sometimes a seller will put an unrealistic price on their home - just in case.  The thinking is ” There is a sucker born every minute.” (P.T. Barnum).  While the seller will sell if someone is naive enough to buy the house, few buyers with agents will take the seller and the price seriously.  These are the houses that buyers skip over.

7.  Your value and the bank’s value.  Most offers are conditional upon arranging financing.  This means that the mortgagee will be valuing the house to determine what mortgage level is appropriate.  So….  If you have overvalued your home, found a naive buyer and think the sale will go through - think again.  The bank will let the buyer know if the house is overvalued (as, hopefully, their realtor will already have done).  This is a case of “nice try”.    You think:  ”So what?  I will always find another buyer.”  Well, under the MLS® this will appear as a Conditional Sale that did not go through which will alert REALTOR® that there is something going on with the home, one problem may be the value.   Also, while your home is conditionally sold, not as many people will be interested in viewing it.  You may continue to lose buyers.

8.  No amount of advertising will overcome the wrong price. Some sellers think that, with the right advertising, anything will sell.  This is not K-Tel.  You cannot chop, slice and dice the house for  a “low - low - never before seen price”.  Buyers will have REALTOR® buying agents.  Agents will have access to information.  People spending hundreds of thousands of dollars on a house may do some investigation that will say that ..  “You can fool all the people some of the time, and some of the people all the time, but you cannot fool all the people all the time.”     Abraham Lincoln. 

Finally, when setting a sale price for your home, ask for - demand to have your REALTOR®’s expertise.  Look at comparable houses in your area.  Look at the economy.  See if your home has plus or minus features compared to other homes and see if these features will require a price adjustment.  If you want a sale, set your price to attract buyers.

Valerie Zinger ~ Ottawa, Canada ~ T 613-723-5300 ~ E. vzinger@royallepage.ca

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