The True Cost of Overpricing

What is more valuable to you today - time or money?

It is important for sellers to understand the true cost of overpricing their home is not just money alone, but also time.

In the past 90 days of home sales in these premier east metro Orlando neighborhoods, 48 of 78 homes had price reductions. Here is how non-price reductions versus price reductions stack up against each other in the two most critical areas of a home sale – time and money.

No Price Reductions
- 30 of 78 sales had no price reductions
- 78 days to sell average
- 95% sales price to list price average

Price Reductions
- 48 of 78 sales had price reductions
- 12% price reduction average
- 199 days to sell average
- 94% sales price to list price average

The majority of sales with price reductions had to reduce multiple times in order to sell.

- 1 price reduction 14 homes
- 2 price reductions 15 homes
- 3 price reductions 7 homes
- 4+ price reductions 12 homes

A seller cannot rely on simply one price reduction to make their home competitive and to bring in an offer. Until a home is priced in line with recent comparable sales, a seller will need to drop and drop their price. A buyer does not care if a seller has dropped their price one time or eight times; this will have no bearing on a buyer’s offer.

Though the average price reduction was 12% overall, the top 10 price reductions ranged from 16% to 32%! Wow, 32%…I can only assume this seller based their asking price on what their home was worth at the peak in 2005/2006 rather than recent comparable sales. This seller paid dearly for it, too – the house took just under a year to sell.

Summary The moral of this story is straightforward:

- Homes that are priced right sell quicker and for more money.
- Homes that are overpriced take over 2½ times longer to sell and sell for less money.

Even after a year as a buyer’s market in Orlando metro, many sellers are still making a fundamental mistake by overpricing their home. I understand we all want to make a killing on the sale of our home – which many folks did in 2005/2006 - but that time has passed.

Depending on when a seller bought their home and the amount of equity they have in it, a profit is still possible. A large profit – no - but consider the alternative. Not including short sales / foreclosures, there is a large population of sellers who are making zero profit or bringing cash to the closing table just to sell their home.