Overpricing, and the Challenges it poses to Sellers and Landlords

Accurately pricing your property, whether it be for sale or for rent is crucial and it is important that property owners’ price their properties correctly from the beginning. Failure to do so can be costly and pose several challenges.

3 of the challenges include, but are not limited to:

• Limited interest in a property from buyers and/or tenants. Buyers and tenants typically do their homework before making a decision, as they now have access to a wealth of information and can usually discern between a property that is priced well to one that is overpriced. Additionally, as is now common knowledge, when a buyer applies for a mortgage, the bank requires that a valuation be done to determine the fair market value. Despite the propertys’ aesthetics, if it is overpriced, the valuation will be lower than the selling price and the mortgage won’t be approved, resulting in additional limited interest.

• Overpriced properties stay longer on the market as they are competing against similar properties that are accurately priced. In some cases interested buyers may question the property’s suitability for purchase if it has been on the market for an extended period.

• Each month that a property stays on the market, the more costly it is for the sellers or landlords. Costs like mortgage and interest payments, property taxes, insurance, general maintenance, cleaning and gardening are all necessary for upkeep of the property.

To eliminate these and other challenges, sellers and landlords should carefully consider the current conditions of the local market, have a valuation done or get advice from an experienced real estate agent who can provide comps before finalizing a selling price or rental rate for the property."