The Real Estate Encyclopedia
Why Do Agents Over Price Homes?
Category - Real Estate Information Sources - General Real Estate Information

A well-meaning and hard working agent can feel pressure from a homeowner who has an inflated perception of his home’s value but, at the same time, the agent is very interested in listing the property. All agents know that marketing a home above the fair market value will have negative results but it is not always easy to convince the anxious homeowner of this fact.

An example of how this practice can hurt a homeowner is found in the market developments in 2007.  Although there were some warning signs, during the spring the housing market still appeared healthy.  Little did homeowners know that the market would sharply decline during the summer and fall, leaving many sellers unable to sell their property.  Those home owners that overpriced their home during the spring (typically the best time of year to sell a home; capturing buyers with school age children) missed out on the market while it was healthy and found themselves dropping their prices drastically or unable to sell their homes when the market fell. 


Another disadvantage of overpricing your home is that buyer’s agents know the market and will steer their clients toward homes with a realistic asking price. Their responsibility is to find the best home at the best price for their client. Contrary to popular belief, a good real estate agent does not focus on the highest priced properties for a quick buck, but looks at the long-term picture. The agent’s goal is to satisfy his/her client’s needs to continue a life-long business relationship.  Although many homeowners will drop their price later, they do not realize that the best time to capture a buyer is when the home first appears on the market.  Once the home has been on the market for a while, it can become “old news” and develop a negative reputation. 


When getting ready to sell their home, a property owner should always consider how much he/she would save by selling quickly, e.g. monthly mortgage payments, home maintenance, taxes, repairs, insurance, as well as the advantage of seizing the opportunity to buy their next home.  These considerations should be part of the decision-making process when pricing the home.  Homeowners must also be aware that the sales commission paid, to both sides - the listing and the buying side, may affect the enthusiasm of the agents promoting their home. It is best to agree to a fair and reasonable commission rate for services rendered when entering into the listing agreement. 


At the final conclusion of the sales contract, and sometimes in order to reach final agreement between the parties, the parties may negotiate the terms of the contract in order to facilitate the transaction.

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Real Estate Information Sources - General Real Estate Information
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