Pricing Mistakes and “Chasing the Market”: Why Getting the Price Wrong Can Be Costly

One of the most expensive mistakes homeowners make when selling a property is getting the price wrong when the home first hits the market.

Many sellers rely on automated pricing tools, online estimates, or the highest listing prices they see in their neighborhood.

While those references may provide some context, they often do not reflect how buyers are actually behaving in the current market.

When a home is priced too high and fails to attract early interest, sellers may find themselves in a situation commonly known as “chasing the market.”

In changing or declining markets, this can become costly.

The Importance of the First Weeks on Market

The first few weeks after a property is listed are often when it receives the highest level of buyer attention.

Buyers actively searching in a specific price range tend to notice new listings immediately.

If the home is priced competitively and compares well with other properties, it may receive strong showing activity early.

However, if the price is significantly higher than comparable homes, many buyers simply move on to the next option.

Once that early window of attention passes, it can become difficult to regain momentum.

What “Chasing the Market” Means

“Chasing the market” occurs when a home is listed above where buyers are willing to purchase and must gradually be reduced in price over time.

Instead of attracting offers early, the property may experience multiple price reductions while newer listings enter the market at more competitive prices.

Over time, the listing begins adjusting downward in order to stay competitive.

Active Competition Determines Pricing Position

Another critical factor when pricing a home is active competition currently on the market.

While appraisers rely primarily on recent sold properties, buyers make decisions based on what they can purchase today.

When buyers search for homes online, they compare multiple properties within the same price range.

If a home is priced significantly higher than similar listings currently available, buyers may simply move on to the next property.

This is why pricing strategy must consider both:

• recent comparable sales used by appraisers
• active listings competing for the same buyers

Balancing these two perspectives helps ensure the property is positioned competitively while remaining within a range that can appraise successfully once under contract.

Why Time on Market Matters

Buyers and their agents closely watch how long properties remain on the market.

If a home has been listed for an extended period of time, some buyers begin to assume there may be an issue with the property or the pricing.

Even when the price is eventually reduced to the correct range, the property may have already lost some of the attention it received when it first entered the market.

Declining Markets Increase the Risk

In markets where inventory is increasing, pricing mistakes can become even more costly.

As more homes enter the market, buyers gain more options and often become more selective.

If a property sits on the market while waiting for the “right buyer,” new competing listings may appear at more attractive price points.

When this happens, sellers may find themselves continually reducing the price in order to keep up with the market.

The Cost of Waiting Too Long

Some sellers assume that if they wait long enough, the right buyer will eventually appear.

In declining markets, however, time can work against sellers.

The longer a property remains unsold, the greater the risk of:

• multiple price reductions
• reduced buyer interest
• weaker negotiating leverage
• lower final sale prices

Understanding market conditions before setting a list price can help sellers avoid these situations.

Questions About Your Situation?

If you're currently selling your home on your own and want to better understand how pricing strategy, competition, and buyer behavior influence the sale process, I’m always happy to share what I’m seeing locally.

Even small pricing adjustments early in the process can sometimes prevent costly delays later in the transaction.

Thomas J. Morillo
TJM Home Team