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It might sound like a good idea – but it’s not.

Key points

  • You may be keen to demand as high a selling price as possible for your home.
  • Being too greedy could come back to haunt you.
  • If your home is priced too high, it might stay on the market and you might have to lower your price later.

Because the real estate market doesn’t have enough inventory to fully meet buyer demand, sellers always have the upper hand these days. This means they can get away with charging higher prices than usual.

But that doesn’t mean sellers can charge exorbitant prices that don’t reflect the value of their homes. Between climb mortgage rates and a general drop in demand, the housing market has cooled enough that buyers are no longer willing to invest any amount of money in a given property. And sellers need to recognize that.

But many don’t. According to a recent HomeLight survey, 75% of sellers ask for prices higher than what their home could reasonably be worth. And for many, this strategy backfires.

The danger of overvaluing your home

The longer a home stays on the real estate market, the less bargaining power the seller has. If you overprice your home and no one bites, you may need to reduce the price a few months down the line.

By then you have already lost your edge. And once potential buyers see that the price of your home has been reduced, they are likely to take advantage of it by bidding below that level.

That’s why it’s important to be reasonable when setting a listing price for your home. And if you don’t know what constitutes a reasonable price, ask your Real estate agent (or commit to working with one rather than selling your home on your own).

If you really don’t want to hire a real estate agent because you don’t want to lose money on their commission, do plenty of research before pricing your home. Take a look at comparable homes in your area that have sold recently and see what those numbers look like.

Let’s say you have a 2,000 square foot home on a quarter acre of land with a newly remodeled master kitchen and bathroom. If four similarly sized, updated homes in your area just sold for between $540,000 and $550,000, you could list your home for $550,000 or even $555,000.

But if you list your home for $575,000, you might not find any takers. And then when you lower your listing price to $550,000, buyers may assume you’re desperate enough to accept an offer at $535,000 (which you may need to do to sell it).

A more limited advantage

Sellers always have an advantage over buyers in today’s housing market. But that’s not the same advantage they had this time last year or earlier in 2022. A number of buyers are pulling out of the market not only due to rising mortgage rates, but also in Reason to recession fears. If you’re looking to sell your home, it’s important to recognize this and make sure you’re setting an asking price for your property that isn’t likely to send buyers the other way.