Don’t Fall for the Overpricing Pitfall
Overpricing is one of the biggest pitfalls in selling your home in San Francisco.
I always caution sellers to resist the temptation of choosing a real estate agent who promises to get an inflated price that is not supported by the comparables. This is what we in the biz call “buying a listing.” While San Francisco is a strong market, buyers and their agents are savvy; they are looking at the same comparables and sales trends, and they know your home’s real value.
A conscientious agent is realistic about the pricing strategy. We do our homework and take our role in setting the price seriously. You’ll be at a disadvantage if you work with an agent who only tells you what you want to hear.
Agents and sellers do not determine the final sale price; the market (more specifically, willing and able buyers) determine a home’s value. In general, buyers don’t make offers on homes that they think are overpriced. If your home is overpriced, you’ll be leaving money on the table when you sell.
How Overpricing Impacts Your Home Sale
1. It Can Lead to Price Reductions
Overpricing will likely lead to a price reduction if the home doesn’t sell in a reasonable amount of time. Rather than encouraging competition with an accurate price from the start, you’re discouraging buyer interest. Ultimately, you may end up settling for significantly less.
Across San Francisco and the Bay Area, price reduced properties consistently sell for lower average dollar per square foot values than homes that sell quickly.
2. It Increases Time on the Market
Buyers are most likely to submit an offer when a home first hits the market. Overpricing risks the possibility of that initial excitement and urgency being completely lost. An overpriced home usually sits on the market longer; buyers are unwilling to commit and may lose interest entirely.
The longer a property sits on the market, the less interest it generates. Buyers may think something is wrong with the property, or that the sellers are unrealistic and difficult to work with. Buyers may devalue the property to the point that market value is lower than its actual value.
3. Overpricing is a Competition Killer
Overpricing significantly squashes the possibility of competitive bidding. A properly-priced home motivates buyers and their agents to act quickly and submit strong offers.
With the right price, you can attract the most possible potential buyers, leading to competitive bidding and a better return for you. My pricing strategy is designed to generate competition and the multiple offers we need to drive the price up.
Ultimately, overpricing isn’t the answer for maximum return. A successful home sale requires research, setting a price based on the market, proper preparations, effective marketing, savvy negotiations, and paying attention to the details when closing the sale.
As your agent, I’ll work with you to ensure that you can achieve the best possible outcome for the sale of your home. My guidance and the right preparations and research can result in a difference of tens to hundreds of thousands of dollars to your bottom line.
Source: Compass Report, “The Dangers of Overpricing in the San Francisco Real Estate Market.” The sales price to list price and days on market analyses were based upon three years of sales through Q1 2019, averaging Broker Metrics quarterly data. The dollar per square foot analysis was based on an analysis of 12 months sales ending 6/21/19. Data from sources deemed reliable, but may contain errors and subject to revision. All numbers are approximate.
