At any given time there are buyers in the market looking for newly released properties. As most genuine purchasers will see the property within the first two to three weeks of it coming onto the market, it is vitally important to price it correctly from the start.
The temptation to start off at a higher price
Often sellers make the mistake of insisting that their property is offered to the market at a price slightly above the current market value in the hopes of increasing their profit margin. Or they argue that buyers make a lower offer so they might as well start high.
Why setting the price too high does not work
Buyers purchase property by comparison
If the seller is asking too much compared to other available properties, buyers will either discard the idea of making an offer on the property or make an offer far below what it is actually worth. They will rationalise that if the seller is being “ridiculous” in their asking price, they have the right to be equally ridiculous in the price they offer.
Negative perception of the property
Overpriced properties stay on the market for far too long. As buyers see the property advertised over and over again, they will begin to wonder is there is something wrong with it.
Forced to act drastically or wait for change
The seller will now either be forced to reduce the asking price drastically to reactivate the market or hold out until the market picks up, or inflation catches up and the inherent value of the property increases.
Perception of desperation
As time passes, buyers assume that the seller is getting desperate and make even lower offers often resulting in the seller getting more and more agents working on the property and looking even more desperate.
Misplaced loss of confidence in your Property Specialist
The outcome of this fiasco is that the seller loses faith in the agent and the company. The mandate expires, and a second or third agent is appointed and signs the mandate at the true value of the property.
The final outcome of over-pricing
Buyers then see the same property on the market, again reduced. Now looking for a bargain they make a low offer and it is sold at far below the original true market value.