By LISA SCONTRAS
Custom Publishing Group

Sellers beware: There are costs associated with pricing a property too high.

An overpriced property will take longer to sell, and in today's market, the longer you're on the market, the less money you'll get, according to Bernie Tong, Realtor and partner at Prudential Locations LLC.

"Asking a higher price does not always get a higher price," she says. "In fact, the opposite is often true."

Here's why.

Home buyers approach shopping for a house just like they would approach shopping for a car or groceries –– by comparing prices.

So if your home's market value is $750,000 but you've unrealistically listed it for $825,000, buyers will compare it to other similarly priced properties — fewer buyers will consider yours because it will not measure up.

Ironically, the right buyers — the ones who can afford your house— aren't going to see it at all because they are likely looking at homes priced between $750,000 and $800,000. An overpriced listing may attract lookers, but will not attract buyers because it targets the wrong market. Worse yet, when the pool of lookers runs dry, the listing becomes stale.

"When a listing is stale, there are fewer showings," says Tong. "Sometimes even a price reduction does little to spur more interest in the property. And the longer a property has been on the market, the more a buyer feels they can negotiate — since they feel they have no competition."

Tong emphasizes that just because listing prices have dropped doesn't necessarily correspond to a like drop in sales prices.

"When inventory was tighter, sellers consistently priced their properties above the most recent sales to see if they can push the market even higher," remembers Tong. "As inventories have grown, sellers have begun to price their properties at the most recent sales price or below to get them sold, resulting in lower list prices — however it doesn't mean we're selling the properties for less."

So how do you price your property properly, from the start?

The basic rule is to look at the comps — the comparable listings and sales in the area — and don't get emotional. What your home is worth to you, considering the newly remodeled kitchen and the playground across the street, may be very different from what the home is worth to a couple who hates to cook and whose kids are grown.

"Sellers, even investors, are emotional about the real estate they own," warns Tong. "They feel that their property is special compared to the competition or the recent closed sales."

In determining a price tag, real estate agents offer a comparative market analysis in which they look at similar homes in similar neighborhoods to analyze what has recently sold. The CMA will also consider active listings and pending sales.

"Pending sales will give you the most current indication of activity in a neighborhood or building," says Tong.

She even recommends sellers go out and visit competitive properties in the neighborhood to see their condition and how they compare.

"Seeing the competition helps a seller to price their property to be competitive," she says. "If a competing property goes into escrow or sells before yours, you'll also have a better idea of what appeals to the buyers that are out there."

Remember, your home may be only one of a dozen a buyer checks out in a day. Make sure it's priced right.

While you always have the option of dropping your price, pricing it right from the beginning may give you the best opportunity to market your property while it still has some sizzle, and may actually get you the best price.

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