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Hi, I was told by realtors if the house is overpriced you will not even get showings. But how come when I search for houses that sold in the last month the majority of them (more than half) (examples) had a price tag of 290 and it sold for 270, 300 and sold for 289. People went into those houses and I guess the people that went thought they where overpriced because they talked the people down at least 20,000. Now a days people are going to talk you down no mater what because they no its a buyers market. So if you keep lowering your price there will not be much room from negotiation. Whats peoples opinions on this? Thanks Mindy
Mindy, folks know how much they are approved for and start there. The homes that are priced that amount have similar things in common.. location, finishes, sf, etc. If your home is over priced, the buyers that are looking at your home can afford more, more location, more upgrades, etc. so your home won't compare to other homes available.
then your home won't get picked to even be seen to begin the negotiations.
Think of it this way, I pull a search from 250k to 300k... all the homes are single family, have nice backyards and are in a sought after school district, with wood floors and 2.5 baths. Except one home... which is a townhome with only 2 bathrooms and the school is not as sought after... am I going to pick it to look at when all the others are so desirable? Nope.
Hi, I was told by realtors if the house is overpriced you will not even get showings. But how come when I search for houses that sold in the last month the majority of them (more than half) (examples) had a price tag of 290 and it sold for 270, 300 and sold for 289. People went into those houses and I guess the people that went thought they where overpriced because they talked the people down at least 20,000. Now a days people are going to talk you down no mater what because they no its a buyers market. So if you keep lowering your price there will not be much room from negotiation. Whats peoples opinions on this? Thanks Mindy
That's not true in most cases if you're priced well below comps and ahead of the curve.
The problem most times is that many realtors' ranges have been off because they did not anticipate or didn't figure the slowdown would happen this far and fast. Your price shouldn't be equivalent to what sold, it should be priced for the NEXT 3-4 MONTHS....that's what most didn't do.
I won't look at a house that is overpriced. For instance, if I want a house for 250-300K, I'll include houses up to 350K in my search. However, I'll be more enthusiastic about trying to get a showing for one that's priced in my range like 270-300K, and I'll really want to see those from 250-270. If there's a choice between a nice-looking 320K house and a shabbier 270K house, I'll go check out the 270K and skip the 320K.
If it's over my price range, there has to be something special on the listing to make me even consider taking a look.
If I'm bored, I might go check out the 350K house, but I probably wouldn't make an offer until the price came closer to my range. I'm not going to go checking out 400K houses and try lowballing them at 320K or something.
So yeah, if others are like me you're probably excluding buyers who want to pay 20K less than your listing price if you list that much higher.
That's not true in most cases if you're priced well below comps and ahead of the curve.
The problem most times is that many realtors' ranges have been off because they did not anticipate or didn't figure the slowdown would happen this far and fast. Your price shouldn't be equivalent to what sold, it should be priced for the NEXT 3-4 MONTHS....that's what most didn't do.
We don't do that because we don't have a license to use crystal balls. Therefore, we can't project what a price will be in the next 3-4 months. We may think it's going down, but that doesn't mean it will, and if it does then we don't have any way of knowing how much.
That's why we use the nearest in time Sold comps in conjunction with the Active competition, and the Expireds.
It's difficult enough to get sellers to get their price down to the current market price and be competitive with the Actives, so it would be extremely difficult to get one down to a price that's 3-4 months out -- whatever that price is.
In my office we're required to have the client sign that they have received a copy of the CMA and turn it in with the initial listing paperwork. Imagine if I told a client that today's market value, as determined by the CMA, is $500k. Now I pull out my crystal ball and say Mr. Seller I know that the CMA today shows that your home is worth $500k. However, my crystal ball tells me that in 4 months it's going to be worth $425k so that is what you must list it at.
But Mr. Seller, you need to sign that you're received my CMA that shows the current value is $500.
So he lists it at $425, and we get an offer for full price the next day. The seller accepts because that's what he agreed to sell for. What do you think that seller is going to do next?
He's going to sue me for getting him to list the house below market value, and accuse me of practicing Crystal Balls without a licence, just to make a quick commission.
And he would have the signed copy of the CMA to prove his case. So I'm not going to add a crystal ball projection to my CMA's.
Buyers today love to use that strategy.
"Mr. Seller, the market is going down. I want to buy your house today, but at the price that it's going to be 4 months down the road."
So Mr. Seller says: "Fine Mr. Buyer, come back in 4 months and I'll sell you the home at that current price, whatever it may be."
We don't do that because we don't have a license to use crystal balls. Therefore, we can't project what a price will be in the next 3-4 months. We may think it's going down, but that doesn't mean it will, and if it does then we don't have any way of knowing how much.
That's why we use the nearest in time Sold comps in conjunction with the Active competition, and the Expireds.
It's difficult enough to get sellers to get their price down to the current market price and be competitive with the Actives, so it would be extremely difficult to get one down to a price that's 3-4 months out -- whatever that price is.
Bill, this is hogwash. Any competent realtor knew that going back to last year that the market was on the decline and should've given an aggressive range under comps to push for a quick sale. My realtor was excellent. We were on the same page last year and would'nt you know it, it lead to a quick and profitable sale (I didn't view my house as the taj mahal)
Why do you think I've been harping for 6 months about "pricing ahead of the curve"? You do know what curve we've been on and we're continuing to go, correct? The curve DOWN.
Realtors who priced homes at comps lost out big time. How many sob stories do you hear of people coming on here and complaining that they had to drop their price multiple times? Its because their realtor in most cases didn't advise the proper range. There are times where homeowners refuse to listen, but then the realtor has to make a decision whether to waste their time and even list the home because most likely it won't sell from being overpriced.
This is not rocket science. The sellers who "price aggressively ahead of the curve will win out while the people who are "at comps" will continue to lose since the bottom has not been found yet. (well, according to most except the NAR).
Hi, I was told by realtors if the house is overpriced you will not even get showings. But how come when I search for houses that sold in the last month the majority of them (more than half) (examples) had a price tag of 290 and it sold for 270, 300 and sold for 289. People went into those houses and I guess the people that went thought they where overpriced because they talked the people down at least 20,000. Now a days people are going to talk you down no mater what because they no its a buyers market. So if you keep lowering your price there will not be much room from negotiation. Whats peoples opinions on this? Thanks Mindy
You have to look at how the word "overpriced" is being defined. A house that sells for 90% or 93% of the list price is not necessarily overpriced. Someone with $270k to spend will see the $290k listing in his search, go take a look at it, and then make an offer or not. He's not making a full price offer in this market, because he knows it's a buyers market and nothing is selling at full price.
Overpriced would be a house that should sell for $270 being listed at $315k. And here's why; Home buyers search in ranges defined by what they want to spend. Someone who can spend $270 is searching from $250k to $300k. They aren't bothering to come see it because it doesn't even show up on their search. Meanwhile, the people who can afford $300k to $325k are searching that range up to at least $350k. They see this house at $315k and they say,"geeze, this is a dog. Every other house in this range is better in some way." So they don't bother to come see it, let alone make an offer. So it sits for 30 days or more. Finally, the price gets lowered to $300k. The guy who can spend that $270k sees it and says, "well, it's ok, but look, it's already been on the market for a month. I'll go see it, and if I like it enough to live in it, I'll offer $240k."
That's overpriced.
Last edited by Bill Keegan; 01-31-2008 at 09:12 PM..
Reason: typo
Any competent realtor knew that going back to last year that the market was on the decline and should've given an aggressive range under comps to push for a quick sale.
Of course, when real estate agents practice this sort of pricing strategy, someone writes a book or an op ed piece that derides the agents for being concerned with pocketing a commission quickly, and therefore underpricing their clients homes without concern for the fact that 3 or 4 percent was left on the table. In fact, some of you who have been on this forum longer than I have can probably name a person or two who posted such a complaint right here.
Of course, when real estate agents practice this sort of pricing strategy, someone writes a book or an op ed piece that derides the agents for being concerned with pocketing a commission quickly, and therefore underpricing their clients homes without concern for the fact that 3 or 4 percent was left on the table. In fact, some of you who have been on this forum longer than I have can probably name a person or two who posted such a complaint right here.
Bill, let me keep this simple again...
beginning of '07 (anticipating a slow down). Either A. price the house below comps or B. price it at comps.
Most people priced AT comps and guess what happened?? They reduced, and reduced, and reduced and took a lower price than if they ORIGINALLY priced the house aggressive....sound familiar??
That's my point.
Don't confuse "giving it away" from pricing "ahead of the curve" or "below comps". You know and the rest of the world knows there is a difference. Lets stick to the topic.
Again, if you have a good idea that the market will continue to soften (like where we are today w/high avg prices to historicals and record inventory), it might be a good bet to price "ahead of the curve"...
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