Home Over Pricing Will Cost You Greatly! It’s a simple phenomenon that home sellers often fall prey to. It’s the pricing phenomenon. Oddly enough, our prized possession are always worth more than everyone else’s. The same holds true for many home sellers. An objective opinion is quite often garnered upon meeting with a reputable Real Estate Agent. However, this objective opinion sometimes falls upon deaf ears. Even if a home seller is not inclined to heed the advice a their local real estate expert, ignoring the voice of the public will end up costing a home seller. The voice of the public belongs to the home buyers. The home buyers have a definite idea on what any home is worth and their voice is heard each time a home is sold.
When a home seller elects to over price their home, unbeknownst to them or even most buyers a little thing called the “Principle of Substitution” rears its ugly head. We actually utilize this principle all the time and just don’t realize it. We call it comparison shopping. We do it with everything from the shoes to tires to houses. The Principle of Substitution basically states that a buyer will not pay more for a particular property if it costs less to buy a similar property of equal utility and desirability.
Guess this is what we call comparing apples to apples. So when a home owner gets ready to sell their home, a careful analysis must be made to garner a price that will be viewed in comparison with properties of equal utility and desirability. Because in reality we know that no two homes are exactly the same, your Real Estate agent must conduct an analysis and comparison between homes. Differences are then calculated. So differences between amenities, features, lot sizes, etc. are all taken into account. Such an analysis is crucial to ensuring that a home seller does not over price their home. There are many factors that go into pricing a home. The reality is that in the end, every home is only worth what the buying public is willing to pay. Make sure to price your home at a price that is truly commensurate with the buying public. Don’t let home over pricing cost you greatly!
Disclaimer-All information contained herein is deemed reliable but not guaranteed. You are advised to consult a reputable attorney for all legal advice or a reputable tax advisor.