Why Overpricing Hurts More Than Underpricing

Pricing feels like the safest place to aim high. Many sellers believe starting above market leaves room to negotiate, while underpricing feels risky.

In reality, overpricing is far more damaging and usually costs sellers more money in the end.

Overpricing Kills Momentum Immediately

The most powerful moment in a listing’s life is the launch.

When a home is overpriced:

• Serious buyers skip it

• Showings slow down

• Urgency disappears

Buyers rarely negotiate on overpriced homes. They wait or move on.

Once momentum is lost, it is extremely hard to regain.

Underpricing Creates Competition

Underpricing does not mean giving the home away.

When a home feels like a good value:

• More buyers schedule showings

• Offers come in closer together

• Buyers compete instead of negotiate

Competition drives prices up naturally. This is how homes sell above asking, not below it.

Shifts Power to the Buyer

As days on market increase, buyer psychology changes.

Buyers assume:

• The seller is unrealistic

• Something may be wrong

• A price cut is coming

This gives buyers leverage. Even strong offers become cautious when a listing feels stale.

Price Reductions Signal Weakness

Lowering the price later does not reset perception.

Instead, buyers think:

• “Why didn’t it sell before?”

• “How flexible is the seller now?”

• “How much lower will they go?”

Homes that chase the market downward often sell for less than they would have if priced correctly from day one.

Underpricing Provides Fast, Honest Feedback

Underpricing gives sellers clarity quickly.

If demand is strong, the price rises through competition.If demand is weak, the market responds immediately and adjustments can be made early, before value erodes.

Overpricing delays feedback until it becomes expensive.

The Emotional Trap Sellers Fall Into

Most sellers overprice out of fear, not greed.

Common reasons:

• Emotional attachment

• Comparing to non-comparable sales

• Relying on outdated market data

• Fear of leaving money on the table

Ironically, overpricing is what usually leaves money behind.

Bottom Line

Overpricing asks buyers to justify your number.Underpricing lets buyers justify their offer.

One creates resistance.The other creates momentum.

Homes sell for the most when they feel like a smart decision immediately, not when they linger waiting to be negotiated.