Jul 15, 2010

Home Sellers Continue to Overvalue Their Homes

Surveys have been fairly consistent over the last year or so, showing that most home sellers believe that their real estate agents are recommending a list price that's too low. (And why, one wonders, would an agent do that, given that it automatically lowers their commission?)

Check out the HomeGain survey for the 2nd quarter of 2010, showing that no fewer than 77% of homeowners think their homes are worth more than the recommended agent listing price!

The hurdles are no doubt both psychological and financial. Sellers want to get as much out of their house as possible for the next step in their life, can't believe that real estate has dropped in value as much as it has, and have come to love certain aspects of their house while also having become blind to the down sides or the years of wear and deferred maintenance.

Unfortunately, buyers will be coming in with a shrewd eye, and a down market is no time to count on a buyer falling in love with the place and overbidding. As discussed in our book Selling a House in a Tough Market, a house that's overpriced tends to sit on the market until buyers assume you must be desperate, giving them leverage to underbid  -- and the house ends up selling for even less than it could have had the original price been more reasonable.

For more information on setting the right price, see Nolo's free online article, "Listing Your House: What Price Should You Set?"