Risks of Overpricing or Overvaluation of Property
Introduction
Setting the right asking price for a property is one of the most important decisions a seller can make. While aiming high might feel like a strategy to maximise returns, overpricing or overvaluing a property often leads to financial and strategic risks. In competitive markets such as London, getting the price wrong can significantly delay a sale and reduce overall value achieved.
Key Risks of Overpricing Property
1. Reduced Buyer Interest
Buyers are informed and price-sensitive. Overpriced properties tend to receive fewer viewings, as buyers quickly compare listings in the same area. Without interest, momentum stalls, and the property risks sitting on the market.
2. Longer Time on Market
According to Rightmove data, homes that need a price reduction typically take twice as long to sell compared to those priced correctly at launch. Longer marketing periods can make a property appear “stale,” raising doubts about condition or seller motivation.
3. Lower Final Sale Price
Ironically, overpricing often results in selling for less. When a property lingers unsold, buyers assume weakness and negotiate harder. A correctly priced home usually achieves closer to asking price within the first six weeks of listing.
4. Appraisal and Mortgage Issues
If a property is significantly overpriced, mortgage valuations may not support the agreed figure. This can cause sales to fall through, forcing sellers to accept a lower price later in the process.
5. Opportunity Cost
Every extra month a property sits unsold is a month of lost opportunity — whether that’s reinvesting proceeds, buying a new home, or avoiding additional holding costs such as service charges, council tax, and mortgage payments.
Overvaluation by Agents
Overvaluation can also occur when multiple agents compete for an instruction. Some may promise an inflated valuation to win the listing. While appealing initially, this strategy rarely benefits the seller and can harm trust once inevitable reductions are advised.
Best Practices to Avoid Overpricing
Accurate Comparables: Analyse local sales data on a £ per sq. ft. basis.
Professional Valuations: Use independent valuations for guidance.
Market Testing: Consider off-market marketing to gauge demand discreetly.
Strategic Pricing: Price competitively to attract multiple buyers and encourage competitive bidding.
Conclusion
Overpricing or overvaluing a property might feel like an optimistic starting point, but in reality it often leads to delays, lower sale prices, and increased costs. In prime London markets, pricing correctly from the outset is crucial to achieving the best result. With over 12 years of experience, James Nightingall advises clients on accurate valuations, ensuring properties are positioned to sell at the right price, to the right buyer, at the right time.