What’s the problem with overvaluing property?
The highest valuation doesn’t mean it’s the right one. So, what’s the problem and why does accuracy matter?!
In estate agency, perception holds significant sway. Sellers naturally aspire to obtain the highest possible price for their properties, while buyers seek value. However, a common pitfall that can thwart these aspirations is overvaluing properties for sale. So, what’s the problem?
Reduced buyer interest
Highly overvalued properties tend to repel potential buyers. Buyers have access to a wealth of information and comparative listings. If a property is priced well above its true market value, savvy buyers will likely gravitate towards more reasonably priced alternatives. This diminished buyer interest can result in fewer enquiries, viewings, and ultimately fewer offers.
Prolonged time on market
Overvaluing a property often leads to extended periods on the market. When a property is priced too high, it can deter potential buyers who perceive the price as unrealistic or unattainable. As a result, the property languishes on the market without attracting serious interest. This prolonged time on the market can lead to a stigma, causing buyers to question the property's desirability or condition.
Lower offers
If your property fails to sell, a price reduction may become necessary to attract buyers. In the end, sellers may find themselves accepting a lower price than they could have obtained if the property had been accurately priced from the outset.
Once you are ‘reduced’ the property invokes a different feeling in buyers when they are looking and considering potential offers.
Stagnant negotiations
Overvaluing a property can stifle negotiations before they even begin. When a seller sets an unrealistic asking price, it creates a significant gap between buyer expectations and the property's perceived value. As a result, negotiations may stall or break down entirely. Moreover, overvaluation can signal inflexibility on the part of the seller, making it challenging to reach mutually agreeable terms.
Mortgage valuation challenges
Its worth noting that if a buyer is secured at the higher value (perhaps someone who has emotionally fallen in love with the home) difficulties may come with a mortgage valuation. Mortgage surveyors rely on recent sales data and comparable properties to determine a property's fair market value. If a property is priced significantly higher than similar homes in the area, surveyors may struggle to justify the valuation. This can jeopardise the financing process for buyers, as lenders will require surveyors to ensure that the property's value aligns with the loan amount, this could result in the sale falling through.
If you’d like to arrange for one of the team to visit your home and carry out an ACCURATE appraisal click here.