How Overpriced Homes Cost Sellers Money

Virtually everyone who sells a house is hoping for the most money possible. That’s totally understandable, and a good real estate agent can make it happen. However, an overpriced house can actually cost sellers money.

It usually starts the same way: in hopes of getting the highest price, sellers tend to price high to “save room for negotiation” or “see what happens.” But what really happens when a house is significantly overpriced? Many times, not what you expect. There will be dramatically fewer showings and generally no offers. When showings dry up, then what? Their equity begins to slip away and they don’t even realize it.

Good ol’ Supply and Demand

To illustrate what happens when an overpriced home hits the market, let’s talk about supply and demand. In a market where homes are selling in less than 30 days, any house that sits significantly longer starts to become stigmatized. Buyers begin to assume something must be wrong with it. And for the buyers who do show up, they know there’s less competition so any offer they write will reflect that.

There’s another problem most sellers never consider: the best buyers for your house may not even know it’s for sale. Most people search by price bracket: multiples of $25k, $50k, or $100k. Being priced in the wrong bracket makes your home invisible to exactly the people most likely to buy it. A good pricing strategy isn’t just about picking a number. It’s about knowing where buyers are looking and positioning your home to generate real competition.

Have You Been to an Auction?

If you’ve ever been to an auction, you know that the auctioneer will generally start the bidding low and go up from there. Auctioneers know that people become emotionally engaged once they start bidding, and getting multiple people to bid against each other will drive up the price. Now imagine an auctioneer starting the bidding high, then dropping the price until he gets a single bidder. And if you’ve seen it in person, you know exactly what happens. Generally, the crowd freezes. Nobody wants to be the first bidder. They all want to see how far the price will drop before jumping in.

Real estate works the same way. The goal isn’t to find one willing buyer, it’s to create a situation where multiple buyers want the house at the same time. Priced right, that’s very achievable. Priced too high, you’ve already handed the negotiating advantage to whoever does show up.

Can I Be Honest With You?

One of the first things I always promise prospective clients is that I won’t list their house for sale just for the sake of having another listing. If I don’t think I can help someone better achieve their real estate goals, I’m very honest about it. Most sellers assume if an agent recommends a price, they must believe they can get it. Not necessarily. And the assumption that the agent recommending the highest price must simply be the best agent? That’s almost never true.

Listings are essentially an agent’s “inventory”, which they use to market and grow their business. An agent who doesn’t want to miss out on the opportunity to list a house may let a seller believe their home is worth more than it actually is. I tend to believe this is more often about them not wanting to offend the seller, rather than them being dishonest. Regardless, who doesn’t like the sound of MORE money?

The agent is supposed to be the expert in this situation. So when an agent says the house is worth X amount, it must be true. Therefore, the agent recommending the highest price must simply have the best Realtor Magic, or they know something the others don’t. Spoiler: they don’t.

When sellers don’t truly trust their agent, they default to the one metric they can compare: the number. Confirmation bias takes over, a relationship gets built on a flawed foundation, and the damage is already done before the sign goes in the yard.

In Closing

When interviewing real estate agents to sell your home, don’t choose someone based on who suggests the highest list price. Instead, look for an agent with a comprehensive pricing strategy who can show you, right up front, exactly how they’re going to get you the most money possible for your house.

For a detailed guide on How to Price Your Home Correctly: Strategies for Sellers

Are you on the market, but Your Home Not Selling? Proven Ways to Get Offers Now

Lastly, despite common opinion, Price Per Square Foot in Real Estate is a Myth