If you begin with a price on your home that is too high, you may have just added to your stress level, and selling a home is stressful enough. There is a lot of "behind the scenes" action taking place that you, as a homeowner may not know about. Contrary to popular opinion, your listing agent does not only attempt to sell your home to a perspective homebuyer through advertising efforts. That would not be very efficient. Listing agents also market and promote your home to the hordes of other local agents who also work with homebuyers, dramatically increasing your personal sales force. During the first couple of weeks your home should see a flurry of activity with buyer’s agents coming to preview your home so they can sell it to their perspective clients if the home is priced right. If, however, your agent is overpriced by the listing agent's view of the marketplace or by the homeowner's insistance, fewer agents will preview your home. After all, they are Realtors, and it is their job to know local market conditions and home values. If your house is dramatically above market, why would agents waste their time and get their buyers excited about a property that would possibility be unavailable to them at a realistic Comparitive Market Price? Their time is wiser spent previewing homes that are priced realistically and offer a better chance of successfully negotiating a purchase for their clients.

Dropping Your Price...Too Late

Later, when you decide to drop your price, your house is "old news." You will never be able to recapture that flurry of initial activity you would have had with a realistic price. Your house could take longer to sell.

Even if you do successfully sell at an above market price, your buyer will need a mortgage. The mortgage lender requires an appraisal. If comparable sales for the last six months and current market conditions do not support your sales price, the house won’t appraise at the contracted price. When the appraisal comes in at less than the sales price, there will be three choices available at that time; the buyer will have the option to pay out of pocket for the difference in price, which is unlikely; you will have to reduce the sales price to the amount of the appraisal or your deal falls apart. Your house could go "back on the market" at the adjusted price and the whole process begins again.

Once your home has fallen out of escrow or sits on the market awhile, it is harder to get a good offer. Potential buyers will think you might be getting desperate, so they will make lower offers. By overpricing your home in the beginning, you could actually end up settling for a lower price than you would have normally received if it were price right from the start.

Which agent should you choose?

Most people would choose an agent who seems willing to listen to your input and work with you. This is an agent that cares about putting the most money in your pocket, right? This is an agent that is willing to start out at your price and if you need to drop the price later, you can do that easily, right? Ask yourself, is this really what you think a qualified responsible agent would do? You say, after all, everyone else does it! The truth is that you may have just met an agent engaging in a questionable sales practice called "buying a listing." He "bought" the listing by suggesting you might be able to get a higher sales price than the other agents recommended. Most likely, he is quite doubtful that your home will actually sell at that price. The intention from the beginning is to eventually talk you into lowering the price. Why do agents "buy" listings? There are basically two reasons since taking over priced listings is detrimental to both the listing agent and the seller, alike. Advertising dollars would be lost as well as valuable time in the marketplace, not to mention the inconvenience to you, as the seller for the possibly, unneccessary, longer period of time on the market. A well-meaning and hard working agent would feel pressure from a homeowner who has an inflated perception of his home’s value and feel responsible for the lack of offers. On the other hand, there are some agents who engage in this sales practice routinely. Listings that are priced too high are not shown. The first few weeks that a listing is on the market are the most crucial. As a new listing agents scamper to alert their buyers of it. That is the time that it will have the probability of the highest offering price, but only if it is priced relatively close to other properties that have recently sold.