It happens all the time. You decide to sell your house, you look at what your neighbors are asking for theirs, and you think your home is easily worth more. So, you decide to list it a little higher than the recommended price. After all, you can always lower it later, right?
In real estate, this is called testing the market. And while it sounds like a safe and logical approach, it is actually one of the most expensive mistakes a seller can make.
Time is your biggest enemy when selling a home. Here is why overpricing your property from day one usually leads to walking away with less money at the closing table.
Quick Answer
Why Does Overpricing Backfire?
Overpricing a home extends its time on the market, signals to buyers that something may be wrong, and typically results in a lower final sale price than pricing it accurately from day one.
Nationally, homes are already selling for about 1.4% below their final list price on average, and that gap grows sharply the longer a home sits unsold. The first two to three weeks of a listing generate the most buyer interest, so an inflated price during that window wastes a seller’s best chance at competitive offers.
The Myth of Pricing Your Home High to Negotiate
Many sellers believe they need to build a massive cushion for negotiations. The thought process is that if you price high, buyers will submit a lower offer, and you will eventually meet in the middle to get the number you originally wanted.
The problem with this strategy is that modern buyers are highly educated. They have access to the exact same real estate data you do. They spend months looking at apps and websites, and they know exactly what a home in your neighborhood should cost. If your house is priced significantly higher than similar properties, buyers will not bother putting in a low offer. They will simply skip the showing altogether and look at houses that are priced correctly.
How to Maximize Your Your Initial Exposure When Listing Your Home
The absolute best time to sell your house is during the first two to three weeks it goes live on the local MLS. This is your peak visibility period.
When a new listing hits the market, it triggers email alerts to buyers and gets pushed to the top of search portal results. There is a natural surge of excitement and foot traffic. If your home is overpriced during this crucial time, you waste your best chance at generating multiple offers and creating a bidding war. By the time you finally decide to drop the price to a realistic number a month later, that initial wave of eager buyers has already moved on to other properties. This is why getting your listing live on the MLS and major portals like Zillow as quickly as possible matters so much from day one.
Why Does It Matter How Long a Home Sits on the Market?
In the real estate industry, DOM stands for Days on Market. As your DOM increases, your leverage as a seller decreases.
When a house sits unsold for 45 or 60 days, a psychological shift happens. Buyers and their agents stop looking at the home as a fresh opportunity and start wondering what is wrong with it. They assume the property has hidden defects or that previous buyers found major issues during an inspection.
According to the National Association of Realtors, a common myth is that a home sitting on the market for 60 days or more must have serious issues, when in reality it is often a case of early overpricing or poor timing. Still, the perception sticks with buyers. Once your house gets stale, the only offers you will attract are from bargain hunters looking for a steep discount. You will likely end up accepting an offer much lower than the true market value you could have secured if you priced it accurately on day one.
What Happens If My Home Appraises Below the Sale Price?
Even if a buyer agrees to pay your full asking price, the deal isn’t guaranteed to close. If the buyer is financing the purchase, their lender will require a professional appraisal to confirm the property’s value before approving the loan. The bank will only lend based on what the home is actually worth, not what the buyer agreed to pay.
If the appraisal comes in below the contract price, you’re facing an appraisal gap. At that point, the buyer can ask you to lower the price to match the appraised value, cover the difference in cash, or walk away from the deal entirely, putting your sale at risk after weeks on the market.
How to Price Your Home Right the First Time
The key to a successful sale is setting a competitive price from the very start. To do this without a traditional agent, you need to look at the facts.
Look at recently sold properties in your immediate neighborhood that are similar in size and condition to yours. Do not look at active listings. Active listings only show what other sellers are hoping to get, while sold data tells you exactly what buyers are actually willing to pay. Being objective about your property value is the fastest way to get it sold.
If you want to take the guesswork out of this process entirely, you can add our Comparative Market Analysis upgrade to your listing. This CMA upgrade provides a comprehensive report of local sales data to help you pinpoint the exact right asking price for your specific property.
Maximize Your Profit the Smart Way
Selling your home by owner means you have total control over your strategy. Pricing it correctly is the first step. The second step is making sure every qualified buyer in your area actually sees it.
This is where List With Freedom comes in. As a flat fee real estate broker, when you price your home accurately and list it on your local MLS with our service, you get the exact same massive exposure as using a traditional real estate agent. You reach the thousands of buyers working with agents, but you keep total control of your sale and protect your hard earned equity by skipping the expensive 3 percent listing commission. (A small compliance fee applies at closing to cover required MLS compliance review, separate from the flat MLS listing fee.) See how flat fee listings compare to full-service agents to understand the full picture.
Do not let your home sit on the market. Price it right, list it wide, and close the deal.
How to Sell Smart with List With Freedom
List With Freedom gives FSBO sellers an easy and affordable way to list their home on the MLS and reach qualified buyers. You can create your listing online, upload photos, and place your home on the market quickly. Our support team is available seven days a week to guide you if you have questions.
If you’re ready to take the next step, learn how List With Freedom works and begin the process of listing your home!
