Of course you want to get the very best price you can get for your home when you sell it.
You know what you paid for it, how much time and money you put into improvements, or perhaps you built it and know how high quality the structure is. Perhaps you have magazine-quality landscaping, a breath-taking view, or the best location in your neighbourhood. When it comes time to meet with a Realtor to discuss your Comparative Market Analysis (CMA), perhaps you'll balk at the asking price they propose to you. It may be far less than what you think your place is worth. It's common for there to be a discrepancy between what your Realtor suggests you list a property for and what you think they should be able to sell it for. Perhaps you'll think that the Realtor should try listing it at your preferred listing price, thinking you can always reduce the price later if you can't get what you think it's worth, even when your preferred listing price is at odds with the CMA.
Here's the Thing: Overpricing Your Property Can Backfire
Scaring Off Buyers
Many buyers work with buyers agents and if their agent tells them your property is overpriced, they will often strike it off their viewing/consideration list. This is information your Realtor may receive useful feedback about; if other agents tell your agent, that the property is overpriced, you can be sure they are likely to tell their buyers the same thing. Buyers agents don't want to waste their time, if your property is overpriced then the agent's faith in their ability to sell it will be diminished, many of them simply won't bother bringing their buyers to view your listing at all. If you price your property higher than the suggested market value then your property is likely to have far fewer potential buyers view or consider it.
Listing Stays Up Too Long
Generally speaking, if a property is for sale for too long, it begins to lose appeal to potential buyers. Perception of the value of a property can fall in the eyes of buyers when they are comparing properties in a similar price range and one has been on the market far longer than the others. All too often we see sellers list their property at a very high price despite their Realtor's CMA and then the listing stays above market value for a long period of time: months, even years, until those properties eventually sell for less than the listing price initially suggested by the sellers' Realtor. A property that is priced at the suggested market price will sell more quickly. More Realtors will tend to bring their buyers through to look at it, and the property doesn't start to raise questions as to why it has been sitting on the market for so long.
Financing Problems for Buyers
When buyers depend on banks for financing their real estate purchase, the property and price are scrutinized by the bank. If the bank considers the purchase price to be too high above the current market value, the bank may decline to finance the buyer.
Realtors willing to list above current market value
There are real estate agents that may encourage or easily agree to a seller overpricing their properties for reasons that possibly will not benefit the seller. Some Realtors focus on gathering more listings as the more listings they have, the more general buyer inquiries they will receive, but that doesn't necessarily mean the buyers will be steered towards the overpriced listings. If you are comparing market assessments from different Realtors, one would suggest you exercise some skepticism if one CMA comes back with a significantly higher price point. The process in which Realtors prepare a CMA is such that generally speaking, realtors tend to assess home values quite similarly, particularly when they are familiar with the neighbourhood and region of the listing.
Here is the most important real estate pricing fact:
Buyers determine current real estate prices, not the sellers.
The price buyers are paying for properties at any given time determines what the current market value is.
If your home is overpriced far beyond where current market conditions realistically stand, you are less likely to attract buyers, savvy buyers will overlook your listing in favour of listings that are more competitively priced. and you could prolong the period of time your listing is for sale to the point where buyers begin to perceive the value of your property lower than what you could have sold it for with a more reasonable starting price point. Current market conditions describe the prices and preferences of buyers and are a more reliable gauge of how a listing should be priced than what any given seller hopes to get for the sale of their property.