Pricing is Paramount
A buyer rarely has the cash to pay more than the appraised value of the property. When you overprice your home in the beginning, you could actually end up settling for a lower price than you would have normally received. Pricing of the property is reflective of the property's location and condition as well as the current market trends.
The information your Realtor will provide to you regarding comparable sold and active properties for your area is drawn from the same data base that the buyer´s agent and appraiser will complete their evaluation from. It is most important to price your property right from the very first day on the market.
Dropping Your Price Later
By dropping the price later, your property becomes "old news." You won´t be able to recapture that flurry of initial activity you would have had by starting out with a realistic price. More than ever buyers are demanding more house for the money.
Over Priced Example
The homebuyer comes expecting to see a property that meets their expectations. If your property has a market value of $299,000 and you priced the property at $324,900 or higher, the homebuyer comes expecting to see a property that meets their expectation of a $324,900 property. They have seen other properties at this price, and your property simply doesn't offer the same features of a true $324,900 property.
Meanwhile, the home buyers that are in the market to purchase a $305,000 property have never even seen your property and have bought elsewhere. If your property is not priced comparably to start with, it will take longer to sell. Even if you go under contract at an above market price, remember your buyer will probably need a home loan.
Lenders always require an appraisal. If comparable sales for the last six months and current market conditions do not support the sales price, the property won´t appraise. The deal falls apart. Your property goes "back on the market."
Back On The Market
Once your property has fallen out of escrow or has sat on the market a while, it is harder to receive a good offer. Potential homebuyers will think you might be getting desperate or that something is wrong with the property. Homebuyers will stop making offers on the property or they will typically make lower and lower offers.