Across the country the real estate market is slowing and the news media is reporting on the decline in sales, housing prices, and appreciation. Quite often this creates fear and a holding back by buyers as they wait to see just how low prices will go. One TV news station in Sacramento reported that desperate sellers are turning to ancient spiritual/religious rituals to help sell their homes, such as burying a statue of Saint Joseph in the backyard.
Whether you take that tactic or not, perhaps the greatest influencer in getting your home sold is entering the market with a home that’s priced correctly. Over-priced homes won’t get favorable attention; they lose out to the ones that are reasonably priced.
All sellers are looking for the highest price for their home. That’s why some sellers want to start at the highest point, maybe even asking a higher price than what they really believe they can get — the continued readjustment of price can be a humbling ride down to finding the reasonable price to sell the home.
Still dropping the price sounds like an okay strategy, some sellers think.
Here’s the problem, especially in today’s current market conditions where numerous sellers are competing for fewer buyers — adjusting price down may come too late and cost the seller less in gain than if the home were priced correctly from the start.
The majority of buyers use buyers’ agents to assist them with purchasing a property. Buyers’ agents will help the buyers find a home that’s right for them. If their buyers are interested in a particular home and it is priced too high (based on comparable properties sold) then the buyers’ agents will find their clients similar more reasonably priced homes to view in the same area.
As a seller’s property that’s over-priced continues to sit on the market the listing loses its newness. There are typically fewer new listings than existing listings. Agents pay a great deal of attention to what’s new on the market. Homes that are priced correctly generate attention, activity and a sale; over-priced homes, on the other hand, sit for long periods, are passed over, and ultimately result in a price reduction.
If a seller has an over-priced home on the market and then chooses to drop the price it sometimes goes overlooked. Because it’s not a new listing it’ll need a little more attention to get agents and buyers to notice that this same home is now being offered for less. Flyers, emails, ads, etc. have the challenge of enticing buyers and agents who wouldn’t give it a look at the higher price — to come see it now. Not an impossible battle, but again, the listing is no longer new and may be less appealing even with the price reduction.
Obviously, the longer an over-priced home sits on the market, typically the more financial stress the seller begins to feel. If the seller has purchased a new home or must move to another state, suddenly the desperate seller syndrome sets in and lowball offers may have to be accepted due to financial circumstances.
Pricing a home correctly initially is vital — otherwise the “we-can-always-drop-our-price” strategy could become a costly and humbling lesson in the end.
Written by Phoebe Chongchua