What Is Overpricing in Real Estate? Definition, Signs & Risks

Overpricing in real estate occurs when a property is listed above what the current market is willing to support based on comparable sales, demand, and financing realities. While sellers often overprice with the goal of “leaving room to negotiate,” the strategy frequently backfires.

📌 What Overpricing Means

A home is considered overpriced when its asking price exceeds the range supported by recent comparable sales (comps), buyer demand, and lender appraisal standards.

🔍 Common Signs a Home Is Overpriced

• Few or no showings despite strong online traffic
• No offers in the first 2–3 weeks
• Repeated price reductions
• Appraisal coming in below contract price
• Competing homes selling faster at lower prices

💡 Why Sellers Overprice Homes

• Emotional attachment or sunk renovation costs
• Online estimate reliance (e.g., automated valuations)
• Belief that “buyers will negotiate anyway”
• Pressure to hit a specific financial number
• Misreading market momentum

⚠️ Risks of Overpricing

• Extended days on market
• Lower perceived value over time
• Reduced buyer urgency
• Appraisal gaps and financing issues
• Weaker negotiating position later

Overpricing does not simply delay a sale — it often results in a lower final price than if the home had been priced correctly from the start.

For a practical breakdown of how this affects real sellers, see:
Overpricing Your Home for Sale: How It Hurts Demand and Net Proceeds