How Can a Seller Determine if Their Home is Overpriced?

Since 2001 I have seen Wellington home prices skyrocket, hit rock bottom, slowly climb back up, and not budge for months, but regardless if it’s a seller’s market, buyer’s market, or stable market one thing remains the same; seller’s continue to overprice their homes. I’m confident if real estate agents, near and far, were asked what the biggest mistake sellers make they would unanimously agree it’s overpricing their home.

Overpricing a property can lead to extended market time, missed opportunities, and frustration, while underpricing may result in leaving money on the table. Thus, the question that plagues many sellers is, “How can one determine if their home is overpriced?” In this comprehensive guide, we will explore the key factors and strategies that empower homeowners to make informed decisions about their property’s listing price, ensuring a successful sale.

Who Selects the List Price?

The list price of a home is typically determined collaboratively by the seller and their real estate agent, which is generally based on the market analysis and expertise the listing agent provides. However, some sellers still choose to overprice their home regardless of the market conditions and an agent’s recommendation.

I know firsthand there are sellers deadset on a certain list price before I even walk through the door and aren’t going to list for a dollar less even if I provide facts stating otherwise. Instead, they ignore the facts and want to “test the market” or feel their home is “worth it” because they have granite countertops and the home that sold down the steet didn’t.

So ultimately it’s the seller who decides the list price. However, in certain instances, the listing agent could have contributed to the overpricing of the home by initially proposing a higher price, which the seller accepted. The rationale behind why a real estate agent might recommend a list price above the market value remains unclear. It’s possible that the agent was attempting to secure the listing by offering a higher price, hoping to outshine competitors who proposed a more accurate market value.

Alternatively, they may have lacked familiarity with the area and prevailing market conditions. It’s not uncommon for agents from other parts of the state to list property in Wellington. So agents who are accustomed to pricier markets may inadvertently suggest an excessively high price, while those from more affordable regions might unintentionally undervalue properties due to their limited understanding of Wellington’s unique market conditions.

How To Determine if a Home is Overpriced

Lack of Showings
A majority of new listings, even overpriced ones, will have showings in the first few weeks. However as the “newness” of the listing wears off so will the number of showings unless there is a shortage of homes for sale then showings may continue, but an offer may never come.

Feedback From the Buyers Agent
Another way for sellers to determine if their home is overpriced is through showing feedback. After a buyer’s agent shows their home they may provide feedback about their experience. How the home showed, if their client has any interest in addition to their thoughts about the list price.

When the listing agent has already conveyed to the seller that their home is overpriced, hearing a similar assessment from another agent can help the seller accept the reality. On the flip side, if the listing agent never told the seller their home is overpriced receiving that feedback could help the seller make an informed decision to reduce the price.

Showings, But No Offers
The biggest sign a home is overpriced is regular showings, but no offers, which means the market has rejected the seller’s list price. Some sellers will argue and say it’s going to take a “special buyer” to purchase their home. That may be the case for some properties and some price ranges, but not for the average 3-4 bedroom tract home in Wellington.

Homes are Selling in the Area
If homes are selling in the immediate area or neighborhood that is another great indication that a property is overpriced. Sure, some real estate markets are slower than others but if comparable homes are selling all roads usually lead back to the home being overpriced if it’s just sitting on the market.

Accepting Reality

Even with all of the signs some sellers remain in denial about their overpriced. Instead, they blame the listing agent for the lack of offers or believe the neighbor down the block “gave their home away.” Some will even start making improvements hoping to justify their inflated asking price. While enhancing a home’s visual appeal is essential, when these upgrades are done after the property has been on the market for a while it could make absolutely no difference, particularly if they fail to contribute substantial value to the property.

For instance, while investing $4,000 in new granite countertops may make the home more appealing to some buyers, it will never cost $ 4,000 in value. In some cases, the buyer may hate granite countertops or at some price points granite or quartz countertops are expected.

Final Thoughts

When selling a home first impressions are everything, so when a new listing is priced right it’s no surprise that it sells quickly and for top dollar. Why? New listings priced right often cause a “buyer frenzy.” A buyer has to have it and doesn’t want to lose it, so they submit their highest and best offer from the start. However, with each passing day, week, and month the “frenzy” fades away along with interested buyers and a sense of urgency.

I’m sure there are several overpriced homes sitting on the market today with interested buyers, but they won’t make an offer, and if they do it won’t be for top dollar. Many of the buyers I work with won’t offer market value on an overpriced home because they know they have zero competition, so they have nothing to lose and are looking for a deal.

Selecting the list price is one of the most important decisions a seller has to make because once it’s out there it can never be taken back. Sure, a seller can always reduce the price, but our MLS has a detailed pricing history for the home along with how long it’s been on the market regardless if the home has been re-entered into the MLS. The history always sticks with the property therefore agents and home buyers have access to it.

Ultimately the market value of a home is what a buyer is willing to pay and what it appraises for if an appraisal is required. So if a home is sitting on the market buyers have rejected the asking price.

My advice to sellers is; DO NOT OVERPRICE YOUR HOME. Statistics show the longer a home sits on the market the more money you will lose. Reducing your overpriced home doesn’t mean you’re losing money because you can’t lose something you never had.

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About the Author

Top Wellington Realtor, Michelle Gibson, wrote: “How Can a Seller Determine if Their Home is Overpriced?”

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.

How Can a Seller Determine if Their Home is Overpriced?