Orange County is experiencing one of the strongest seller's markets we've seen in years and it's easy to sell your property for a little bit extra. But eager home owners are pricing their homes too high and, in turn, are negatively affecting the market—and their sale!
So what happens to overpriced homes? Almost nothing. They sit on the market, stagnant, and rack up the number of
days unsold. As time goes on and this number increases, the real estate looks less desirable and some buyers won't even look at the property. They'll assume there's a big flaw that's causing other people to turn down the home. People want to feel like they're getting a good deal and a home that remains unsold after several weeks will rarely seem like a fortunate discovery.
In the end, overpriced homes are often sold for less than the market value. This is a direct result of having your most motivated buyers move on during the most productive stage of home-selling. When a home is first listed, the best buyers will show up right away. If the price is too high and they move on, lowering the price later won't draw them back. Even if they haven't found a different home, their enthusiasm for your house will have dwindled and they might not consider an offer.
Overpriced homes can also help your neighbor sell their home. Savvy real estate agents will tour their clients through overpriced homes simply to make other homes look more desirable. By showing their client your home and then taking them to Bob's comparable-but-less-expensive home down the street, buyers are more likely to snap up the "bargain" they found at Bob's. If you're seeing a lot of traffic to your home but no actual offers, consider the larger role your home may be playing in the market.
The overall root of the overpricing issue tends to be a misunderstanding of how an overpriced home can actually hurt, more than it helps. Inexperienced sellers think of a seller's market as a way to make a quick buck, assuming they can lower the price if needed. This oversight lacks an understanding of how the market works and the long-term implications of their actions.
In addition, a lot of sellers simply have the math wrong. Home values have risen about 6 percent in Orange County and sellers are consequently trying to price their homes at 6 percent higher than the price of similar sold listings. But the 6 percent is the annual rate of increase, which means sellers need to be looking at comparable homes that sold around this time last year, not last month or last week.
If your home isn't selling in a seller's market, call your real estate agent. Something's amiss, and it's probably your price.
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