Have you ever been given the advice that when you’re selling your home you should overprice it to “test the market?” Bad advice. Don’t do it. The market will test you right back and you will lose. If you want to sell your home and do it in a timely manner, price it right.
Testing the market with a higher price is a bad idea
You can drop the price later, but by then the damage is done. Buyers won’t come running. Instead, they will wonder what is wrong with your home that you had to drop the price. Homes that drop prices later sit on the market longer and sell for less, and the higher the drop in price, the lower the actual selling price ends up being.
Again, buyers have a mindset about homes that are reduced. That mindset is “something must be really wrong with that house to have to drop the price.” There might or might not be, but there is no overcoming that mindset.
Buyers look for homes by price range
Pricing it higher to test the market means that buyers who could actually buy your home won’t see it, and those who do won’t be interested. Buyers look for homes by price range. If you price your home out of the range of your target buyer they won’t even see it. Those who will see it are looking for homes with more amenities for their dollar, probably more than your home has. They won’t make an offer that you can negotiate down. Your test has failed again.
What about the mortgage?
On the off chance that you do actually get an offer at your inflated price, you will face an uphill battle when that buyer tries to get a mortgage. The mortgage company or bank will require an appraisal. The chance that your home will appraise at the inflated price are slim and none. That contract will disappear and you will be right back at square one.
So don’t test the market. That F will look really bad. Get an A by pricing your home for its actual value. It will sell and you’ll take that report card right to the bank.