Avoid the Overpricing Trap

Teddy Sells His House

Teddy’s getting married next year and needs to sell his house. 

Teddy will roll the proceeds into a larger home for his new, blended family.. 

The home fits snuggly into the “meat of the market.” 3 bedrooms, 2 full baths and a 2-car garage in a charming neighborhood of well-kept homes. In the 5 years Teddy’s owned the home, he had a new roof installed, the exterior painted and added lots of low-maintenance landscaping. 

With dreams of a quick sale at a top price, Teddy embarks on the journey many home sellers face, unaware of the pitfalls that lie ahead. 

We’ll follow Teddy’s path, highlighting the critical mistakes he makes along the way, especially in pricing strategy. As you read, keep an eye out for the lessons Teddy learns and see if you can spot the errors before they become costly. Teddy’s story will serve as a guide, ensuring you avoid the same missteps and achieve a successful, timely sale of your own home.

DAY 1

Teddy interviews three realtors to get their professional opinions.

9:00 AM
Realtor 1 carefully assessed the market and the home’s features, concluding that the Perceived Market Value of the house is $1,000,000. Teddy likes the number. “That’s a good start,” he thinks. But he’s anxious to see what the other agents have to say.

10:00AM

Realtor 2 quickly agrees with the $1,000,000 estimate. “The other Realtor probably used the same comparable sales,” she says. Teddy explains he understands the numbers but is hoping to get more than $1,000,000. Realtor 2 recommends Teddy declutter his home by boxing up nick-nacks and other personal items to give the house a more “staged look.” 

Realtor 2 says “why don’t we put it on the market at $1,100,000 and see what happens?”

“I knew my house was worth more than a million bucks”, Teddy responds as he crosses Realtor 1 off his list.

Teddy thanks Realtor 2 for her time. Two down, one to go.

Realtor 3, sensing an opportunity, knows exactly how to win the listing. After hearing the price proposed by Realtor 2, he confidently suggests listing the home at $1,150,000. 

Teddy is ecstatic!

This was more than he’d hoped for. “Now we’re talking!”

Enticed by the highest number, Teddy signs a listing agreement with Realtor 3, convinced that this is the best strategy to maximize his profit.

How has Teddy done so far?

In the real estate business, Realtor 3’s approach is known as “buying the listing.” It occurs when realtors agree to list a home at a higher price than other realtors, but not because they believe it will sell for that high number. This tactic is used to win the listing from the seller, knowing that if they don’t agree to the inflated price, the seller might choose another agent who will.

3 Realtor interviews. Is that enough?
Yes. 3 is a good start. If you don’t like what you hear after 3, interview 3 more.

Was signing with the highest bidder a mistake?

Hard to say at this point. 2 Realtors estimated the value of the home to be $1,000,000. Realtor 3 never provided an estimate. He simply “outbid” the others. Maybe he has a reason, but he didn’t say.

Teddy should have asked: “If the numbers say $1,000,000 and 2 other Realtors agreed, what did they miss? Also, do you have a marketing plan to get more? If so, what is it?”

What else did Teddy miss?

Realtor 2 suggested boxing up some personal items to declutter the space and give the house a staged look. Did Teddy listen?

No. He was too focused on the listing price.

He also failed to ask any of the Realtors about how they plan to market his home. Will they do open houses? What about social media ads?

DAY 3-29

Teddy’s house hits the market and surprise! Within a few hours, they scheduled their first showing!

By Day 7, the home has been shown 3 times. 

During week 2, they book 2 more showings.

By the end of the first month, they booked a total of 7 showings.

Day 30

Teddy meets with his Realtor. “I knew my house was worth more than those other Realtors said!” Teddy says.

Realtor 3 reviews feedback from the buyer’s agents. It’s mostly positive. “Great house”, “beautiful yard”, “nice kitchen” were some of the comments. Not a single complaint about the price.

Buoyed by this feedback, Teddy and his realtor decided to give it another month.

Teddy is pleased. Could an offer be just around the corner?

 
How is Teddy doing?

He met with his Realtor to discuss strategy and review feedback collected from the buyer’s agents. Teddy is also showing patience. It takes an average of 44 days for a home to sell in the area, so no reason to panic yet.

Unfortunately he didn’t ask his Realtor if there have been any market or economic changes that might affect the sale of his house. For example, interest rate increases or recent sales in the area.

Also, Teddy’s Realtor reported that feedback was “mostly positive.”

But he didn’t ask what buyers disliked about his house.
It turns out two potential buyers felt the living room was a little small. Not much you can do about this, right? Although you can’t actually make a room bigger, you can make it seem bigger.

Teddy likes to have friends over to watch college football on Saturdays. A pair of oversized recliners and a sectional sofa ensure everyone has a comfy seat, but they dominate the room. Teddy could reposition the sofa and store the recliners in the garage for now. 

You’d be surprised how much bigger a room looks when it’s staged properly.

DAY 31-59

Teddy’s Realtor booked four showings in month two. Not a surprise since most homes will see a drop off after the first month on the market.

More concerning is they haven’t received a single offer.

Frustration sets in.

Day 60

Teddy meets with his Realtor.

The Realtor suggests they lower the price by $50,000. “Buyers and agents often look for recent price-drops and this could spark renewed interest”, he says.

“$50,000! That’s easy for you to say!” Teddy responds. He was counting on that money to help purchase his new home.

He asks his Realtor if he’s done enough to market the house. “Where have you been advertising and promoting? What about open houses?”

Realtor 3 explains he is doing plenty of marketing and he held two open houses that saw plenty of visitors. The Realtor reminds Teddy the comparable sales indicated a Perceived Market Value of $1,000,000.

Teddy is not happy, but agrees to the price reduction.

How is Teddy doing?

Teddy finally asked his agent for details on how the house is being marketed.
He also accepted that after two months, 11 showings, two open houses and no offers, a price adjustment is in order. 

Day 61-70
The price drop fails to generate any interest. It’s been nearly three weeks since the last showing. Teddy’s home has gone “stale.”

Day 80: You’re Fired!

Teddy’s agent suggests a $25,000 price drop.
Frustrated, Teddy decides to take the house off the market and fire his agent.

Day 90: Reality Check

Teddy’s wedding day is fast approaching and he’d hoped to be shopping for new homes with his future bride by now.

He meets again with Realtor 1.

“We had 12 buyers come through. I figured we’d get at least one offer,” Teddy explains.

“Let me ask you a question,” Realtor 1 says. “How many houses did you look at before you bought this one?”

Teddy thinks about it. “Eight, maybe ten.”
“That’s about average. Do you know how many people buy the first house they see?”
“Not many I’d guess,” Teddy says.

“Close to zero. In fact, most people don’t even consider making an offer until they’ve seen at least 4 or 5 houses.”

“I’m not following,” Teddy says.

“You have a beautiful house. It’s move-in ready and this is a great neighborhood. But I suspect all of those visitors were Newbies.”

“What are you saying?”

“Newbies are just getting started. They’ve been looking for a couple of weeks and have toured just a few homes. They’re just beginning to narrow their search and are often more interested in exploring options rather than making immediate decisions. Newbies will go see any house that looks about right because they are in an evaluation phase, not a buying phase.”

“Who makes offers?,”  Teddy asks.

“Pros make offers. They’re dialed in and ready to go. They’ve been in the market for a while, know exactly what they want, and are prepared to make an offer when they find the right home. Pros ignore overpriced houses because they’ve done their homework. They don’t waste time on listings that don’t offer fair value.”

“So you’re saying my house is overpriced?”

“I reviewed the listing and photos and they look great. I assume your agent did some open houses and other marketing like mailers and social media ads.
But here we are. 80 days and no offers.
When you list higher than the Perceived Market Value without a good reason, you’re hoping to get lucky. Luck is a terrible strategy.

DAY 95: Second Time’s A Charm

Teddy is grateful for the straight talk from Realtor 1 and decides to list the home for $1,000,000.

Day 106: Teddy Gets An Offer

Teddy’s Realtor calls with an offer. A motivated buyer offers 985,000. Teddy counters at 995,000 and the seller accepts.

Day 136: Teddy Closes

Teddy closes on the sale and while relieved and excited, has regrets about his approach to selling his home. 

Pricing his home above the perceived market value without a clear and compelling reason was a misstep. This strategy didn’t attract the serious, ready-to-buy individuals—the “Pros”—who knew the market and were prepared to make offers on fairly priced homes. Instead, his overpriced listing drew in “Newbies,” buyers who are early in their search and unlikely to commit. The steady trickle of showings gave Teddy a false sense of success, masking the fact that genuine prospects were steering clear of his inflated price tag.

The crucial lesson?
Before setting a price for your home, think critically about who your most probable buyer is. If you aim to attract Pros—the buyers who are experienced, pre-approved, and actively seeking their next purchase—you need to align your pricing with the market’s expectations. Unless there’s a compelling reason—like exceptional renovations, a unique location, or unparalleled features—to justify a higher price, overpricing will only hinder your sale.

SUMMARY:

• • Overpricing Deters Serious Buyers: Pros are savvy. They recognize when a home is overpriced and often won’t bother viewing it, saving their time for listings priced appropriately.

• Don’t Underprice: Underpricing could give Pros the impression that something is wrong with your house. 

• Newbies Provide Illusion, Not Progress: While showings from Newbies might make it seem like there’s interest, these buyers are typically in the exploratory phase and unlikely to make timely offers.
• Strategic Pricing Attracts the Right Audience: By setting a realistic price, you’re more likely to attract Pros who are ready to act, increasing your chances of a quick and successful sale.

So, how can you apply Teddy’s lessons to your own home-selling journey?

• Identify Your Likely Buyer: Understand who is most likely to purchase your home. Is it first-time buyers, families upsizing, or perhaps retirees downsizing? Tailor your strategy to appeal to them.
• Justify Your Price: If you believe your home warrants a higher price, back it up with concrete reasons. Unique features, recent high-end upgrades, or a premium location can be valid justifications.
• Avoid the False Confidence of Early Interest: Don’t let initial showings from casual viewers give you a misleading sense of security. Focus on attracting qualified, serious buyers.

Pricing is more than just a number; it’s a strategic decision that sets the tone for your entire selling process. By thoughtfully considering who will buy your home and setting a price that aligns with market realities—and the expectations of your target buyer—you position yourself for success.

In the end, Teddy’s journey highlights a vital lesson: pricing your home isn’t about aiming low or high—it’s about making informed, strategic decisions that reflect your goals and the realities of the market. As the homeowner, you hold the ultimate authority over pricing. The role of a skilled realtor is to empower you with insights, helping you price, position, and market your home in a way that tips the odds of success in your favor.

While overpricing without justification can deter serious buyers, it’s not about undercutting your property’s value either. It’s about finding that optimal price point where your home’s unique features and the market’s expectations intersect. A well-chosen price attracts the right buyers—the “Pros” who appreciate your home’s worth and are ready to make genuine offers.

Remember:

• Your Decision Matters: Trust your instincts and values. You’re in control of setting a price that aligns with your objectives.
• Collaborate with Expertise: A proactive realtor brings data-driven analysis, marketing prowess, and knowledge of buyer behavior to the table. Leverage their expertise to enhance your strategy.
• Strategic Positioning: Beyond price, how your home is presented and promoted can significantly impact buyer interest. Professional staging, high-quality visuals, and targeted advertising play crucial roles.
• Stay Adaptable: Be open to feedback and willing to adjust your approach as needed. Markets shift, and flexibility can be a key advantage.

Teddy’s story isn’t about advocating for a lower price; it’s about understanding the importance of strategic pricing and positioning. By thoughtfully considering who is most likely to buy your home and setting a price that resonates with them, you create a pathway to a successful sale.

Ultimately, selling your home is a partnership between your vision and your realtor’s expertise. By working together, you can navigate the complexities of the real estate market confidently and achieve the outcome you desire.

If you’re curious about how to balance your personal goals with market dynamics or want to explore innovative marketing tactics that highlight your home’s value, there’s a wealth of strategies available. Empower yourself with knowledge, choose partners who respect your decisions, and step forward knowing you’re equipped to make the best choices for your unique situation.