Overpricing Leads to a Lower Selling Price, Even in a Strong Market

Every property seller wants to sell for the most the market will pay.  Unfortunately, as a seller, we mostly believe our property is worth more than everyone else does.  It’s a completely normal condition we call the “sellers’ emotional wish-price”.  I’ve been a seller many times and, even as an estate agent, I’ve made the same mistake with my own properties.

Why is it so dangerous?  Simply put, it’s the bait by which unscrupulous estate agents will “buy” your mandate.  Falling for the bait will sadly cost you a significant amount of money.  Let me explain why.

So you’re considering selling and you call in a few estate agents to see what they can offer you, what they charge, and what they think your property is worth.  Agents know you are likely to list with them if they promise you the highest price, and offer you a lower fee.  But is that really how to sell for the most?

Consider this very important fact:  It’s not the estate agent who prices your property.  It’s not even you as the seller.  It’s the market – made up of the buyers – that will determine what your property is worth.

So, just because an agent says your property is worth a certain amount doesn’t mean that’s what it’s worth.  Seriously!  Where is the evidence?  It’s hard to believe that in this day and age a seller will actually believe what an agent says when they walk into a property, look around it for a few minutes, and then give a “thumbsuck” at the price.  And that’s what you will base your decision on for selecting your agent and disposing of your valuable asset…?

So what are the dangers of falling into this trap of overpricing?  For one, when the property does hit the market, it will attract enquiry from buyers expecting a property offering more value.  They will compare the overpriced property to other properties on the market that offer better value, and buy the other properties.  You won’t even get offers, because you’re talking to the wrong buyers.

You will sit on the market for many months and, even when you slowly bring your price down, you will eventually sell for less than market value because buyers will perceive you as a “stale” listing.  They will think there is something wrong with your property.  And they will almost never offer you market value.  Does that make sense to you?

Statistics will show that if you price correctly, you will sell quickly. And when you sell quickly, you will sell for the absolute maximum market value.

So don’t get suckered.  Get an accurate comparison with actual facts to prove what your market value is.  Once the evidence is provided, ask what the agent will do for their fee.  And by the way, cheapest is not best.  You need world-class marketing to get market value.  As with everything in life, you get what you pay for.

Steve Caradoc-Davies

Principal of Harcourts Platinum
Director of Harcourts South Africa

3 thoughts on “Overpricing Leads to a Lower Selling Price, Even in a Strong Market

  1. I am a new home searcher in Somerset West and in Houtbay
    Very few properties are priced at real market value
    Now when a client makes an offer it might be too low , for the phenomena is known to buyers through forums like your own, and client trust is influenced by the general “Mandate hunting mania”
    The result is refusals from the buyers, and unwilling agents to present the offer to the sellers,
    I suggest that mandate holders have to give buyers a correct valuation report off an area as part of a listing,
    For I am now searching for a home for about 4 weeks and found none (actually for 2 years ) on and off !
    Unfortunately the parameters on “sold” property’s in areas is not the same, therefore inaccurate pricing reports
    Furthermore,
    Agencies claim clients just on a mere call or enquiry, but never return to a claimed victim to actually now pick up on the lead!
    To say “We share stock, stick with us “
    this is also false, for no agent have an insight is all availabale stock, partly pore product information and a lack of co operation to actually share the correct info and exposure to availabale to stock and due to “under Cover “stock not yet shared , or simply too good a product to share, with the cbuyers “chosen agent !!
    I think that the property industry sits with too many inexperienced agents, and the busy ones puts you on hold and then get side tracked and do not follow up!!
    To buy a house in the current ‘unprofessional agents regulated property valuation market’ is a night mare
    Unfortunately it includes 2 principals we dealt with in Somerset West
    Scenario no one :
    Agent refuses a 3rd final viewing, writes a nasty personal email in reply from the principal !!!
    Scenario no two :
    After 4 weeks an offer is submitted (no viewings allowed by tenant that hates the current renting agent from same company)
    No feedback is communicated to us regarding a counter offer or a refusal on a written offer , numerous calls ,no reply to the Principal that is the mandate holder !
    Now we belong to this agent for he did an introduction, (so called course of sale?)
    But he has not the savvy to close a deal, so then he is not causing a sale,so what now ?
    Can another agency intervene, the particular agency has no mandate any more, ignore my calls, no written reply’s ,after 2 weeks waiting for an official reply or counter offer from the seller
    No wonder the industry is loaded with agents that try and undermine each other, and follow a sort off unwritten ethical code that has no benefit for the seller nor the buyers !!

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