Are You Guilty of Chasing the Market? Avoid Overpricing
One of the biggest mistakes home sellers make is pricing their home too high. Many believe they can always reduce the price later if it doesn’t sell. Unfortunately, that’s exactly how sellers end up chasing the market, a pricing strategy that often leads to fewer showings, less buyer interest, longer days on market, and sometimes an even lower final sale price than if the home had been priced correctly from the start.
What is chasing the market? Chasing the market occurs when a seller lists a home above its market value, receives little buyer interest, and repeatedly lowers the price until it eventually sells. By that point, the home has lost the appeal that comes with being a new listing, resulting in fewer buyers, a longer time on the market, and sometimes a lower final sale price than if it had been priced correctly from the start.
Below, we’ll look at the dangers of chasing the market, how to tell if your own home has fallen into this trap, a real example of what it costs, and how to avoid it altogether.
Understanding Chasing the Market
Chasing the market refers to overpricing a property, meaning listing it for more than it’s actually worth. This is often fueled by a seller’s emotional attachment to the property, unrealistic expectations, or a belief that the property is somehow superior to others in the area.
Sellers may base their inflated price on factors like extensive upgrades, personal sentimental value, or the need to cover transaction costs and other expenses. What they fail to consider is that buyers are well informed and base their decisions on market trends, comparable properties, and current economic conditions, not what a seller wants or needs for their property.
In my experience, a correctly priced home draws the most buyer attention in its first two to three weeks on the market. Buyers save searches and get instant alerts the moment a new listing matching their criteria hits sites like Zillow or Realtor.com, and their agents are watching the MLS just as closely for new listings. Once a listing sits long enough to feel stale, buyers start to assume something is wrong with the property, or they simply wait for a price reduction instead of making an offer.
The Perils of Overpricing
When a seller chooses to overprice their home, they can end up chasing the market and encounter several pitfalls along the way.
Extended Time on the Market. Overpriced homes typically remain on the market longer than correctly priced homes. As days on market increase, buyer interest naturally declines, making the property more difficult to sell even after price reductions.
Reduced Buyer Interest. Today’s buyers have an overabundance of information at their fingertips, and their agent will educate them about current market conditions and recent comparable sales. An inflated listing price can deter potential buyers from even considering the property, resulting in fewer showings and limited interest.
Lower Offers. Overpriced homes often receive low-ball offers(opens in new tab) for a couple of reasons. Buyers know they’re likely the only offer on the table, so with no competition they have nothing to lose by submitting a low one. They may also assume that, since the home is overpriced, there’s room to negotiate off the inflated starting price. It’s disheartening, but it’s one of the realities of overpricing a home.
Appraisal Challenges. Even if a buyer is willing to overpay, if they’re financing the purchase, an appraisal will almost certainly be required, and the home has to appraise for the contracted price for the buyer to secure their loan. In most cases, if the buyer is still within their contingency period, they can cancel the contract and get their deposit back.
Missed Opportunities. A majority of showings on a new listing happen within the first week or so. That’s because serious buyers are waiting for new listings every single day, with saved searches and instant alerts pushing new matches straight to their phone, while their agents keep an eye on the MLS for anything that fits. If a home is priced too high during that critical window, those buyers see it, dismiss it, and move on. Once they’ve mentally crossed a listing off their list because of price, they rarely come back to reconsider it later, even after a reduction. Overpricing doesn’t just slow a sale down; it can permanently cost a seller the very buyers who were most eager to act.
Signs Your Home May Be Overpriced
Not sure if your home has fallen into this trap? Here are the clearest signs a home is overpriced.
Lack of Showings. Most new listings, even overpriced ones, get showings in the first few weeks. Once that initial “newness” wears off, so does the showing activity, unless a shortage of inventory keeps some foot traffic going without ever producing an offer.
Feedback From the Buyer’s Agent. After a showing, a buyer’s agent will often share feedback about how the home showed, whether their client is interested, and their thoughts on the price. Hearing the same concern from an outside agent, especially one echoing what your own listing agent already said, can be a hard but useful reality check.
Showings but No Offers. This is the biggest red flag. Regular showings with no offers mean the market has rejected the price. Some sellers insist it will just take “the right buyer,” and that may be true for a handful of unique properties, but it’s rarely the case for the average home in a typical neighborhood.
Comparable Homes Are Selling. If similar homes in your immediate area are going under contract while yours sits, that’s a strong indication the issue is price, not the market as a whole.
Even with all of these signs, some sellers stay in denial. They blame the listing agent for the lack of offers, believe a neighbor “gave their home away,” or start making upgrades midstream to justify the asking price. While improvements can add appeal, they don’t always add dollar-for-dollar value, especially once a listing has already been sitting for a while. New granite countertops might cost four thousand dollars, but they won’t necessarily add four thousand dollars in value, and some buyers won’t care about them at all.
The market doesn’t care what you need your home to sell for. It only cares what buyers are willing to pay today.
Can an Overpriced Home Become Stigmatized?
Yes, and this is one of the more overlooked risks of overpricing. The longer a home sits with a high days-on-market count, the more buyers start to wonder what’s wrong with it, even if the honest answer is simply that it was priced too high from the start. Multiple price reductions compound the problem, since each one raises the same question again: “What’s the catch?” Some buyers assume there’s a defect the seller isn’t disclosing, while others, including investors, start watching the listing specifically because rising days on market and repeated cuts signal a seller who may be getting more motivated to negotiate. A home that’s been sitting for months often ends up fielding lower offers than it would have received at its original, correct price, simply because it now carries a stigma that has nothing to do with the property itself.
A Real Example: What “Testing the Market” Actually Costs
Here’s a real scenario from one of my own listings. The numbers have been slightly adjusted to protect the seller’s privacy, but the percentages are unchanged.
- Highest Neighborhood Sale: $320,000
- Recommended List Price: $330,000
- Anticipated Sale Price: $325,000 to $335,000
Based on market conditions at the time, I was confident we could push the envelope and ask for more than the highest neighborhood sale. Whether it would appraise was a bridge we’d have to cross when we got to it, since there wasn’t a supporting comparable at that level.
I recommended listing $10,000 above the highest comparable. The remaining comparables were significantly lower than that top sale, but the seller wanted to “test” the market and list at $350,000 instead. They reasoned that asking $20,000 more than my recommendation, and $30,000 more than the highest sale, wasn’t a big deal, since “a buyer would want to negotiate anyway.”
First impressions are everything, including the asking price. I explained there’s a fine line between pushing the envelope and setting it on fire. At the time, homes in the area were going under contract within seven to ten days and selling at or very close to full price. After reviewing the comparables, market conditions, and pricing strategy again, the seller was still confident that $350,000 was the right call.
Here’s how the listing actually played out over the following six months.
- Week 1: A flood of showings, which is normal for any new listing since buyers don’t want to miss out. No offers.
- Month 1: Showing activity slowed dramatically once the “new listing” window closed.
- Month 3: First price reduction, after the sellers finally accepted the market wasn’t going to move on its own.
- Month 5: A second price reduction was needed to generate any renewed interest.
- Month 6: An offer was finally accepted from a cash buyer.
As expected, the home sold for more than the original highest neighborhood sale, at $328,000. But it sat vacant the entire six months it was on the market. Instead of paying overhead for a month or two, as the sellers would have if we’d priced it at $330,000 from the start, they ended up paying it for six months, which ate significantly into their profit.
Had the sellers listed at $330,000 and accepted an offer of $328,000, after two months of overhead they would have netted $323,200. Instead, by choosing to test the market, they netted $313,600, nearly $10,000 less, on top of six months of unnecessary stress.
Why Some Sellers Still Choose to Overprice
Some sellers intentionally overprice because they aren’t fully committed to moving. If the home sells for an inflated price, they’re happy. If it doesn’t sell, they simply stay put. While that strategy may make sense for someone who doesn’t actually need to move, it’s rarely a good approach for sellers who truly want the highest net proceeds in the shortest amount of time.
That’s the trade-off worth being honest with yourself about upfront. An inflated price does mean fewer showings, less pressure to keep the house spotless around the clock, and no rush to pack. But if you actually want or need to sell, none of those upsides outweigh the cost of a home that sits unsold, loses buyer interest, and often nets less money in the end.
Setting a Competitive and Realistic Price
To avoid the perils of overpricing and chasing the market, sellers need a pragmatic, data-driven approach to their listing price.
Get a Comparative Market Analysis. A knowledgeable agent can provide a CMA by analyzing recently sold properties, pending sales, and active listings in your neighborhood. This gives you a clear picture of market trends and a competitive price range.
Consider Current Market Conditions. Take into account the local housing market, interest rates, and broader economic climate. A seller’s market may support a slightly higher price, while a buyer’s market calls for a more competitive strategy.
Be Realistic About Upgrades. Renovations can add value, but rarely dollar for dollar, and some upgrades won’t add any value at all if buyers consider them standard for the price point.
Set Emotional Attachment Aside. It’s understandable to feel tied to a home you’ve lived in for years, but emotional value doesn’t translate to monetary value. Try to stay objective when setting your price.
Watch Your Competition. Keep an eye on homes that are actually going under contract nearby. If they’re moving and yours isn’t, that’s your signal to adjust.
Final Thoughts
Setting the right price for a home is a delicate balancing act. Overpricing can lead to significant setbacks and missed opportunities, leaving a seller chasing the market instead of staying ahead of it. Avoid the temptation to test the waters, and adopt a data-driven, realistic approach to pricing instead. Doing so helps attract more buyers, reduces time on the market, and increases the odds of a successful sale at true top dollar.
A top real estate agent can be invaluable in navigating a home sale, especially when it comes to pricing. Agents don’t carry the emotional attachment sellers do, so they can offer honest, objective advice, along with guidance on staging and curb appeal to help you get the most for your home.
Every home eventually finds its market value. The question is whether you’ll reach it quickly, while buyer interest is at its peak, or after months of price reductions, carrying costs, and frustration. Pricing your home correctly from day one isn’t about leaving money on the table. It’s about giving yourself the best chance to sell for the highest price the market will actually support.
Frequently Asked Questions
What does “chasing the market” mean in real estate?
It means listing a home above its true market value, then gradually lowering the price over time, often after missed showings and lost buyer interest, until it finally sells for less than it likely would have if priced correctly from the start.
How can I tell if my home is overpriced?
The clearest signs are a lack of showings after the first few weeks, feedback from buyer’s agents pointing to price, showings that never turn into offers, and comparable homes in your area selling while yours sits.
Who decides the list price, the seller or the agent?
The seller makes the final decision. A good agent provides a market analysis and pricing recommendation, but the seller ultimately chooses whether to follow it.
Does overpricing a home ever pay off?
Rarely. In most cases, an overpriced home takes longer to sell and nets less money after accounting for extra months of carrying costs, even if it eventually sells above the original comparable sales.
Can upgrades justify a higher asking price?
Sometimes, but not dollar for dollar. Many upgrades don’t fully return their cost in added value, and some are simply expected at certain price points rather than seen as a bonus by buyers.
Should I price my home high to leave room for negotiation?
No. Pricing above market value to leave “negotiating room” typically backfires. It scares off serious buyers before they ever request a showing, so instead of negotiating down from an inflated number, you end up with no offers at all and a home that eventually sells for less than it would have if priced accurately from the start.
How many price reductions are too many?
There’s no fixed number, but each reduction chips away at buyer confidence and adds to a listing’s days-on-market count, which buyers and their agents can see. Generally, if a home needs more than one or two reductions, it’s a sign the original price wasn’t grounded in the comparables to begin with.
About the Author
Top Wellington Realtor, Michelle Gibson, wrote: “Are You Guilty of Chasing the Market? Overpricing Pitfalls”
Michelle has been specializing in residential real estate since 2001 throughout Wellington, Florida and the surrounding area. Whether you’re looking to buy, sell, or rent, she will guide you through the entire real estate transaction. If you’re ready to put Michelle’s knowledge and expertise to work for you, call or e-mail her today.
Areas of service include Wellington, Lake Worth, Royal Palm Beach, Boynton Beach, West Palm Beach, Loxahatchee, Greenacres, and more.
