When selling a home, the price you set is a critical factor in the return you’ll receive.  The correct price is determined by the size, condition and location of your home, what comparable homes are selling for at the time you list your home, and the balance of supply and demand in your area.

Overpricing your home is one of the biggest mistakes you could make.  If you know what your home is truly worth, you should set your price no more than 5% higher.  That gives you plenty of room for negotiation.

There are several reasons why overpricing won’t work to your advantage, namely:

- Limits Buyers
Prospective buyers that you want to attract won’t see your house because they are only looking at homes within their price range.  Other buyers who may see your house realize that they can get more for their money elsewhere.

- Sells The Competition
Agents may use this home to sell against other homes that are more attractively priced.  If your home is the highest priced in the area, it may sit unsold until all the similar homes have sold.  Because new homes keep coming on the market, this could continue until you reduce your price.

- Lose The ‘30-Day’ Advantage
A home sells best the first 30 days after it goes on the market.  There is typically a backlog of buyers waiting to look at homes as they first come on the market.  If your home is initially overpriced, you’ll lose these buyers and the 30-day advantage.

- Listing Gets Stale
When a home is on the market beyond the average selling time, buyers may think that there’s something wrong with the property.

- Difficult To Finance
Even if a buyer is willing to pay the high price, an valuation at that price may be difficult to get and lenders may not be able to provide a loan. 

- Lower Price
To eventually sell the home, you may have to reduce the price, sometimes, several times.  In the end you lose twice, a lower sales price and a slower sale.

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