The most common pricing mistake is when a home is priced for sale significantly higher than what the market can support. Over pricing your home could cost you thousands not to mention a loss of momentum and longer listing periods. You actually end up preventing your home from being seen by a certain percent of potential buyers that may have been interested. Most of the savvy buyers will do extensive research on the local market before they even contact an agent to represent them. Buyers will research potential homes on websites sometimes months before contacting me to buy a home. If a home is priced outside of their budget by as much as a few thousand dollars, those buyers will never even know your home is available.
Although this may not cross the mind as a home seller, but overpricing within its market can actually help the competition. The over priced homes with higher asking price will make other nearby homes of similar size and condition look much like much better values when compared to yours.
If a home is priced higher than what potential buyers are willing to pay, it runs the risk of sitting on the market for a long period of time. As the home sits on the market for weeks or months it gains a stigma in the buyers mind that something is wrong with the home. Once this happens it can be very difficult to remove the stigma and create interest in the home again. This is usually followed by a significant price reduction.