Why Shouldn't I Price My Home High to Leave Room for Negotiation?

Negotiation is common in homebuying, but it can easily become a game of chicken as each party tries to get the best deal.

There is a common misconception that pricing your home high leaves room for negotiation and allows you to get the price you want. While this seems like a smart idea on paper, it can actually be really detrimental to you as the seller. 

Risks of Pricing Your Home High

Buyers Won’t Know You’re Negotiable
Though many buyers try to negotiate, they know some sellers are unwilling to. If your listing price is outside a buyer’s price range, they won’t necessarily assume you’re open to negotiations. Instead, they’ll research similar homes that are within their budget or close to it. 

Purchasers Compare Similar Homes
Home buyers rarely make purchases on a whim. Buyers know how much house they can afford, and they do their research to maximize value. When faced with two products of similar quality and benefits, most people choose the cheaper option. If they see homes similar to yours priced below what you’re asking, they’ll be more likely to check those out first.

Extends the Selling Process
Negotiations take time. Every offer and counteroffer must be reviewed, adding delays before you get paid and the buyer gets to move in. Then if you can’t come to an agreement, you have to start all over. 

If a home’s listing price is reasonable, to begin with, prospective buyers are more likely to just agree to the price upfront or negotiate a price much closer to the listing.

Creates a Negative Perception
A home that is priced too high can create a negative perception of the home, the seller, or both. When comparing yours to similar quality homes, buyers will look at how many days the house has been on the market. Since overpriced homes typically take longer to sell, this can create a negative image. Prospective buyers may wonder what was wrong with it and why it has yet to be bought. 

Risk of Not Selling
In the worst-case scenario, all of these factors could prevent you from selling the home at all. If you do sell, you may have to accept an offer well below market value, especially if the house has been listed for some time.

Finding a Price, That’s Just Right
Though pricing your home high to leave room for negotiation may seem like a smart move, it can create negative perceptions, extend the selling process as buyers explore other options or try to negotiate, and even keep you from selling the home at all.

When it comes to real estate, making smart choices for your initial listing can help you get the offers you want the first time. The right agent can help you choose the right price for both you and prospective buyers. Contact us to learn more about what your home might really be worth.