This article by Justin Pierce in the Washington Post is spot on in every respect. To get the highest price for a home, the worst thing a seller can do is start off priced too high. As the home inevitably sits on the market, the first question buyers ask as the home sits is What’s wrong with it? The seller almost always gets less for the home than they would have had it been priced correctly from the beginning. Homes priced correctly sell for the most money.

Why overpricing your home can be a costly mistake (Washington Post)

If you want to sell your home then you have a lot of decisions to make. One of the most important of all those decisions is the list price. Figuring out the best price for any home is much more art than science but it requires a very scientific approach and evaluation of things that are hard to quantify. It becomes even more difficult when you’ve become emotionally attached to your home.

Putting the right price tag on your home right out of the gate gives you the best opportunity to maximize your investment. A new listing creates a certain excitement.  Agents have a limited number of tools available to them to get that buzz going around your home, and price is an important factor that can either feed the buzz or squash it.

It doesn’t matter how many glossy flyers she puts out or how many places your home is listed on the Internet; if your home is overpriced, it is not going to sell.

Buyers may not realize it but they are getting an immersion course in micro economics when they go house hunting. They pore through the Internet listings and tour home after home. They are quickly equipped with the most up-to-date local market data.  They are comparing your home to the dozens they’ve already seen.

Many times I’ve seen this lesson in action. I just listed a home for a client. My initial analysis said the home would sell for around the $550,000 mark. My clients keyed in on the two top sales prices in the neighborhood that sold at or around $590,000. They were convinced they could get $585,000 for their home. The client is the boss, so that’s where we listed the home.

There were a couple factors in their favor. Their home model was fairly rare and not many were available and overall housing inventory in their subdivision was low, but time was working against them. My clients were pressed to sell, and we really only had a couple months to get the home sold. Their home also needed carpet, paint and cosmetic repairs. I advised my clients that it was okay to test the market, but if the buyers weren’t showing interest, and the feedback wasn’t positive, then we’d need to adjust quickly.

After several weeks on the market and a lot of negative feedback on the home’s shortcomings and high price, I urged my clients to lower the price. They lowered the price but only by $10,000. After the small price change, showings remained light and feedback negative. After several more weeks, I urged my clients to again reduce their price. They wanted to do a small price change, but I told them that the home was not going to get the desired level of interest unless we got down to at least $555,000. . . (read the rest)