Clark Howard's Tips

Inflated home values are in the eye of the beholder

August 12, 2008

How do you think other people drive? The average person would say that others are terrible behind the wheel -- while they perceive themselves as great drivers.

The average homeowner has a similar psychology when it comes to home value. The belief is that "my home has gone up in value over the last year, but surrounding homes have not," according to a Zillow.com survey.

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The real danger of this kind of thinking occurs when you go to sell your home. If you believe your own hype and overprice your home, you'll probably wind up getting less than if you priced it right upfront.

Here's why: When you first list your home, you get an influx of traffic from agents and investors. If you're overpriced, agents won't bring any clients back to show your home and no investor will buy it. You become a stale listing.

If you really want to sell your home quickly, try listing at a price that's "low aggressive" -- that is, low enough below what others are offering so that you look like a bargain.

Clark learned this lesson the hard way. Back in 1996, he and his wife overpriced a home they had for sale. It took them 14 months to get the house sold and they had to carry 2 mortgages during that entire time. They wound up really having to cut the price to entice agents to bring clients around.

More Clark Howard Home Tips Capitulation has benefits for buyers and sellers  Inflated home values are in the eye of the beholder  Is it time to raise your homeowner's coverage?  A bust, a bailout and new mortgage lending rules  Pay attention to foreclosures at the risk of missing other deals  Hawaii, California mandate new green energy measures  Jumbo loan relief finally hits the market  Consumers win the battle of Real Estate commissions  Investors to hand you a mortgage reduction?  Occupancy fraud stalls housing market recovery  Full list