The Danger of Overpricing

I’m writing this as we find ourselves in the middle of one of the wildest real estate markets I can remember.

Homes are selling quickly, often for more than asking price. Buyers are lined up around the block, ready to engage in all-out battle to buy their dream home.

Sounds like an amazing opportunity if you’re a seller, right? I mean, you can basically ask whatever you want for your home and expect to get it from a number of eager buyers.

If what I’ve just described matches your opinion of what’s happening in the real estate market, please keep reading. You owe it to yourself to hear a more balanced view of today’s real estate market.


This is the question our team is most often asked by both buyers and sellers. Everyone wants to take advantage of the current market so they can achieve their dreams.

We’ve just gone through a period of rapid and intense market appreciation in King County. Buyers are hoping that’s coming to an end, while sellers are hoping that will continue.

Our company’s founder and CEO, Lennox Scott, put it this way:

“We expect this extremely high intensity will continue in most price ranges locally into the spring of 2022, due to historically low interest rates creating a large backlog of buyers looking to purchase a home.”

It sure sounds like a perfect situation for sellers to continue aggressive price their homes, doesn’t it?

While I agree with Lennox’s assessment that there will continue to be strong demand for housing, there are several factors which sellers should consider when pricing their home in today’s market. 


Buyer exhaustion is real, and it can be very damaging to the market. With many buyers having to either make multiple offers to get under contract, pay more than asking prices, and/or waive some standard buyer protections (contract contingencies), buyers are feeling that they are getting the short end of the stick (and in some cases, they are!). As a result, we’re beginning to see some buyers step away from the market. They’re simply unwilling to participate in a process that feels rigged against them. And without buyers actively engaged in the market, demand (and prices) will soften. –>This recent article addresses this buyer fatigue: from New York times on July 24, 2021 “Burned by Hot Housing Market, Some Buyers Back Off.”


Yes, you may be able to ask a far-above-market price for your home … and we may even find a buyer willing to pay that. However, if that buyer is getting a loan, they are going to need to get the home to appraise. Without an appropriate appraisal, your buyer may not be able to get the financing they need (since the loan amount is based on the lower of the two: appraisal or contract price.) Or they may decide not to proceed with their purchase. That means you have to put your house back on the market. No one wants to be in that position.


When we’re in the middle of a brisk market, buyers expect homes to sell quickly. When they don’t, there’s an immediate “black mark” against a home. Buyers wonder why a home hasn’t sold, assume (often wrongly) that the house has defects, and often won’t even want to visit a home that has long market times.

Homes that sit on the market typically sit because they have been overpriced. Overpricing your home is the quickest way to not sell your home at its highest potential price. The adage about “not being in a hurry” and “being ok with waiting for the right buyer to make an offer”? The honest truth is that time is not your friend in the current market. The longer your home is on the market, the less likely it is that you’ll receive an offer for your asking price (let alone any sort of bidding war or multiple offer situation).

So, what’s the answer to the challenge of overpricing?


Markets are hyper-local. It’s simply not the case that every market is red-hot right now, and that sellers can ask for the moon.

Some communities are experiencing more “normal” markets. Some home styles don’t sell as well (quickly, aggressively) as others. And certain home features or locations can be real deterrents to top-dollar sales.

Understanding your micro-market is critical in creating the best possible outcome when you sell (and it’s why you want to work with a local expert). Your local expert is in tune with small, yet significant, shifts in the market. They are your very best resource in pricing your home for the best possible results.


Your asking price should reflect comparable homes which have recently sold in a tight, nearby geographical area. The more similar your home to the sold homes, the better idea you will have on pricing.

It’s not the case that you can take those similar sales and then ask 5%, 10%, or 20% more. That’s simply not the way to approach effective pricing. More often, we are seeing success by slightly underpricing the home, thereby creating a high level of demand as buyers feel there’s a “bargain” to be had.

It’s virtually impossible right now to underprice a home. Buyer interest will raise your home to the market price. We see this happen over, and over, and over again.


I could write an entire post about just this one topic – and, in fact, I’ll be talking more about this in the months to come. The short version of the story is this: the offers you receive for your home will be proportional to the amount of preparation you put into your sale.


Markets shift. They change. Other homes come on the market that compete with yours for buyers. These factors – and others – require that you be nimble and flexible in response to the market.

Your agent – that local area expert we mentioned above – is your ally in this process. The right agent will understand how to price your home effectively, so that you end up with the best possible result.

Don’t believe every story you read in the media about how you can basically ask for the sun, the moon, and the stars if you are selling your home. Instead, rely on the skills and experience of an agent who truly understands the ins and outs and the many nuances of today’s challenging real estate market.

Marti Reeder, Realtor, Managing Broker