An overpriced house discourages prospective buyers from making offers since the difference between the asking price and market price becomes substantial.

Agents lose interest in property that is overpriced. A properly priced property will ensure an enthusiastic response.

Overpriced houses fail to attract qualified buyers, or attract "wrong" buyers.

Agents avoid showing overpriced houses in order not to lose credibility with buyers.

Prospects who learn about the house from the sign get turned off if it is overpriced. They do not pursue the matter to see the house.

Financial institutions and mortgage companies finance only a percentage of the real value of the house. If the house is overpriced, they usually will finance a lower percentage, thus reducing the available financing.

A house that is unrealistically priced fails to get normal advertising response. This reduces the effectiveness of advertising and results in the loss of advertising dollars.

Eventually market interest in the overpriced property completely declines. As this stage is reached, the seller becomes desperate and he begins to feel he would sell at any price. In the meantime, he or she must bear maintenance and holding costs. The net result is that the seller gets much less than he could have if the house was correctly priced in the first place.