When you price your home too high, you are essentially helping your neighboring homes sell their home quicker. When buyers are looking for homes in a certain area and come across a home that is priced significantly higher than surrounding homes, they are more than likely going to choose the less expensive option, even if they like your home better. This leads in to the second reason why you should not set your home price too high.
Your house will go stale
If your house is on the market longer than 30 days, buyers will begin to wonder if there is something wrong with the home. The longer your house is on the market, the harder it becomes to sell. Often times, when you do drop the price, you end up getting less for your house than if you set it at a realistic price from the beginning.
Not everyone likes the process of negotiating
A common reason that sellers price their home high is that it leaves room for negotiation. The problem with this tactic is that if buyers overlook your home because the price is too high, there will be no negotiating. Many people do not like the process of negotiating with a seller who has priced their home ridiculously high, and prefers as well as respects a home that is priced just right.
It seems like you are trying to get over on buyers
When you price your home too high you take the risk of losing credibility. Buyers do their research and are aware of what most houses are going for in that area. When your home is priced too high, it can seem as if you are trying to take advantage of buyers.
You are making the process more difficult for your agent
Some sellers who choose to price their home too high are given false hope that their home will sell by agents who are uncomfortable telling their client no. While agents should encourage clients to set their homes at realistic prices, sometimes it can be difficult to persuade sellers to see things from a different perspective.