One of the most common and costly mistakes made by sellers is setting an unrealistically high asking price. Every seller wants to receive the highest closing price possible for their house, but losing sight of fair market value can have serious repercussions.
In some cases a lack of objectivity results in overpricing the home, other sellers may subscribe to the theory that pricing high initially leaves room to negotiate lower later. Overpricing from the outset could actually force you to end up settling for a lower price than you would have received by setting a realistic asking price based on market research.
Fewer "Eyes" on Your Listing - Mispricing your home can prevent it from ever being seen by a certain percentage of potential buyers who might otherwise be interested in your home. Home buyers will set a price range to limit the listings they review. If your home is outside of their range even by a few thousand dollars, it may not be on the buyer's radar.
Fewer Eyes mean less showings, which means a longer time on the market!
You may also be helping your competition if you price your home to high! Buyers will review the list prices of homes in the neighborhood, and if your home is priced higher than others they will opt to see the other homes first! Your higher price will make your competition look like “a steal”. Remember sellers want the most money for their home and buyers want the most home for the least amount of money!
Another factor is that when you start at a higher price and then continue to lower your price to “catch the market” the perception is that something is “wrong” with your home and savvy agents and buyers will choose not to even look at it. The longer you are on the market the strong this perception becomes. Also, if your home has languished on the market as a result of a high price, buyers may believe you are becoming desperate. Interested buyers will make lower offers as a result.