Overpricing - more damage than good

Vendors wanting to know if they have pitched their asking price just right can tell by the amount of purchaser interest. If the asking price is right, there will be lots of inspections, positive feedback and early offers. If the “negotiation factor” is too big, far from creating an incentive for purchasers to make an offer, it makes them think the seller is unlikely to accept a reasonable offer and offers are unlikely to be forthcoming.

Properties in a highly sought after category or in locations where there is a shortage of property for sale usually have more room to inflate the asking price, but most vendors need to be aware of the Catch 22 situation caused by serious over pricing. If the asking price of a property is more inflated than other similar properties on the market, the agent may have to puff the advertising copy, or purchasers will not be attracted to the property at that price. If the property’s benefits are exaggerated, purchasers will be disappointed when the reality doesn’t match their expectation. The irony will not be lost on most property consumers; the very strategy which less market aware vendors think will maximise their sale price could lessen market interest in the property, making it take longer to sell and ultimately reducing its selling price.

Overpricing targets the wrong market - purchasers whose expectations match their pockets in a way that the house does not match its asking price. Purchasers are quick to tell an agent if a property on their books is overpriced. They know that other buyers won’t be rushing to make offers. It’s not uncommon for purchasers to notice an advertisement or a signboard but not make their first inspection of the property until months later when the price has been reduced. By then they have the psychological edge which enables them to drive a harder bargain.

The right negotiating factor should make purchasers feel anxious that if they don’t get in quickly they will miss out to someone else. The resulting climate of competition in the first 10 days to three weeks of marketing is usually the best opportunity to sell the house for the highest possible price.

Back to List