When Your Selling Price is too High...
Once you decide to sell your home, it is time to choose a Realtor. It is common to interview a couple of Realtors before choosing one. Realtors should come prepared with a "Comparable Market Analysis" which is how they arrive at a suggested listing price.
You may find that some of the Realtors suggest a price which may be less than you expected. And, although they have the most recent information about comparable home sales to back up their recommendation, you may believe your home is worth more. Then there is the "other" Realtor. This Realtor's "opinion" may be more of what you were expecting, possibly even higher. This agent may seem willing to listen to your input and work with you, willing to start out at your price and if you need to drop the price later, you can do that easily, right? Yes and no...
If you price your house too high you may have just added to your stress level, and home selling is stressful enough. It isn't only the listing agent that attempts to sell your home to a homebuyer. The listing agent markets and promotes your home to all of the other local agents who are part of the Multiple Listing Service. During the first couple of weeks you should be showered with activity from agents coming to preview and show your home, so they can sell it to their customers.... if the price is right.
If you and your listing agent have overpriced your house, fewer agents will come to preview it. After all, they are Realtors, and it is their job to know what the local market conditions and home values are. If your house is dramatically higher than the rest of the market, why waste time? It would be smarter for them to try to sell homes that are priced realistically, and your home is going to help them do just that.
Even if you are able to sell at an above market price, your buyer will most likely need a mortgage. The mortgage lender will require an appraisal. If the current market conditions and comparable sales for the last six months do not support your sales price, the house won't appraise and your deal will fall apart. Of course, you can try to re-negotiate the price, but only if the buyer is willing to listen. Your house could go "back on the market."
Later, when you decide to drop your price, your house will be considered "old news." You will never be able to recapture that initial activity you would have had with a realistic price. Selling your house could now take longer.
It is harder to get a good offer once your home comes back on the market or has been on the market for an extended period of time. Potential buyers may think there is something wrong and therefore make lower bids than they would have if you had priced your house correctly at the beginning of the listing.
It is natural for you to want the highest price for your home. However, if you choose an agent who promises what you want to hear, it can often lead to stress and frustration. To put it plainly, you may have ended up with an agent who was good at selling you, but not necessarily good at selling your house.