Probably one of the easiest mistakes to make, as naturally everyone wants the highest price for their property, and rightly so.
If a property appears really good value, everyone is going to want to view it, and if right, they will offer on it. The competition for the property will drive up the price to an absolute market value.
In contrast, if all the research suggests that your property is worth £500,000 and you decide to price the property at £525,000 or £550,000. What do you think will happen?
Firstly, you will have limited interest as your property will appear expensive compared to the competition (it is important to note that 70% of the interest, and so the best price in a property will come in the first 3 weeks of marketing). Secondly you are helping your competition sell their properly priced property.
Thirdly, it is likely after 6 weeks your property will start to stagnate and it will become "Oh that house is still on the market, there must be something wrong with it". No-one wants what no-one else wants and everyone wants what everyone else wants, It's human nature. There is only one solution to the third, and that is a price reduction.
So forthly, you're going to have to reduce the price, but here's the issue... Do you think a price reduction to £500,000 will do it? Probably not! Your house is now stagnant on the market and you've missed the prime market. You're going to need to reduce your £500,000 house to £480,000 or £490,000 to re-invigorate the marketing. So what has started out as "Let's just try a little bit higher and see what happens" has actually cost you £10,000 - £20,000 and months of wasted time.