What is considered "overpricing" in real estate?

Overpricing in real estate refers to the practice of setting a listing price for a property that exceeds its fair market value by a significant margin. This can lead to difficulties in selling the property, as buyers will often compare it to similar properties in the area and may be deterred by the inflated price. Fair market value is typically determined by a combination of factors such as recent sales of comparable properties, current market conditions, and the property’s unique features. When a property is priced significantly above its fair market value, it can lead to extended market time, reduced buyer interest, and the potential for price reductions after the property has been on the market for a while.

In contrast, listing a property at market value reflects accurate pricing based on objective valuation methods, while listing it below market value can attract quick offers, but it also means the seller might not realize the full potential for profit. Valuing a property based on the seller's emotional attachment can lead to subjective overpricing, but it does not necessarily align with established market mechanisms and can result in similar overpricing issues. Therefore, the identification of overpricing is primarily concerned with the significant disparity between a property’s listed price and its fair market value.