Humber/Ontario Real Estate Course 4 Exam Practice

What can result from setting a listing price significantly above market value in a normal market?

1. Usually ensures that buyers will pay more for that listed property.

2. Will typically translate into a shorter time period to sell the property.

3. Increases the competitiveness of that property in relation to other similar properties being offered for sale.

4. Can negatively affect marketability by discouraging potential buyers.

5. Increases the perceived value among potential buyers.

6. Enhances the neighborhood's market appeal.

The correct answer is: Can negatively affect marketability by discouraging potential buyers.

Setting a listing price significantly above market value in a normal market can indeed negatively affect the marketability of the property. When a property is priced too high, it may lead to fewer interested parties viewing the home. Potential buyers often conduct research, and if they see that a property is listed well above its market value, they may disregard it altogether, feeling it is out of their budget or not worth the asking price. This can result in longer days on market and may ultimately necessitate price reductions, which can stigmatize the property and reduce its perceived desirability further. High listing prices can also lead to a lack of competition for the property, as buyers who are price-sensitive may focus on other homes that are more reasonably priced. In competitive real estate markets, properties that are priced attractively often draw more interest and can spark bidding wars, whereas overpriced homes may linger, which can send a negative signal to the market about the property's value. This effect on marketability is crucial for sellers to consider, as pricing strategy is a vital element in successfully selling a home.