Many people make the assumption that they should leave their price high when listing a home for sale in today's market. Unfortunately, the thinking is counterproductive to the goal of actually selling the home. Today's buyer is more informed than half of the real estate agents who work in the area. Today's buyers in the real estate market are very sensitive to market value since the can see what is on the market in an entire area by simply making a few mouse clicks.
One of the key indicators when selling a home is to watch for the frequency of appointments. If you are not receiving appointments to show the property there is probably a good sign that that property is overpriced. This will become very clear when you have a beautiful Spring weekend here in New England with no appointments.
When my own listings are well priced, they will typically realize and handful of showings per week. This is the type of frequency you need to in order to get a property sold.
The quicker a seller gets to the correct price, the more showings they get and the closer they get to the highest market value.
The longer a property sits on the market, the lower the market value realized upon sale.
The Mindset of a Buyer
Think about it. I call it shiny object syndrome. The buyer sees a great new listing with the right price on it come on the Internet and immediately starts thinking - "hmmmm...I wonder what it would take to get this one". They call their agent or the listing agent make an appointment. The mindset is that that this is a hot property.
Now, if you overprice the property, but it still looks good online, the buyer mindset becomes "it's really nice...but, I will wait until they reduce the price". Now they wait, and the property sits on the market for 30 days. The buyer now has the mindset which is "I wonder how low I could offer on that one...geez...it's been on the market for awhile."
The Dreaded P.D.S
Many people suffer from what I refer to as a P.D.S. I borrowed this term from real estate professional David Knox who wrote an article for the National Association of Realtors.
It is essentially a condition that afflicts sellers having a hard time facing the realities of today’s markets. The reality of today's market is you need to price the property right where the market value is. The homes that sell are price at market value. Prices are not inflated.
I know for most of the clients I have had over the years it’s difficult to make a pricing concession, but an overpriced home simply will not sell.
"Oh, But I Need the Money"
Perhaps the sellers argue that they really need the money, but then they have to ask themselves what they’ll do for money if the home doesn’t sell.
Maybe they figure that they can shoot for the moon now and reduce the price later if they must. However, the longer a property remains unsold, the more likely it is that even more price reductions will follow. Then it’s taken even longer to get a sale at a lower price.
Some sellers might suggest trying a higher price just for the first two weeks, but that’s when the interest of serious buyers is always greatest. Those buyers usually look within a certain range, and won’t even preview or make an offer at all on an overpriced property.
Most importantly, if the sellers need to buy another home, time is of the essence. If the sale takes too long, they’ll be buying at a time when prices and interest rates may begin climbing again.
I welcome your thoughts...
