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After several decades as a commercial real estate broker, I want to tell you a few facts.
#1: If a home is on the market considerably above it's value, buyers will not buy it. Realtors use it as an example, to show buyers other homes, much better priced and say look how good of a buy the other house is.
#2: Lower the price to it's true market value, and have the agent not make a big price reduced notice in the listing.
Buyers then will be looking at the home, as priced in the ball park of comparable homes and will buy the home in that price range and location that they like the best.
Realtor Problems. Most agents do not really know what they are doing. About 85% of new agents will not last 2 years in the business. They will fail out of the business. Most only take real estate exam courses required to get their license, and a few required courses to keep their license. They don't take courses that will teach them how to stay in the real estate business. I spent one year taking night courses and a few 3 day seminars, before I even went into the business. I wanted to know the business and prospered from the first day in the business when I sold my first apartment house, and another 3 days later. The next work week, I exchanged a 16 unit luxury apartment house for a large irrigated farm. I did more business the first two weeks, than the average agent does in a year. And never looked back. I learned the business before going into it along with 20 years sales experience for big ticket (expensive) items.
There is a book called Listing Magic that is the bible for too many agents. It tells them how to list property. It teaches them the important thing is to get lots of listings. It also teaches them to list at what ever price it takes to get the buyer to list with you, as you can always go back and get the price lowered later. It sounds like you got an agent that uses that method of getting listings.
Most agents never learn how to be a good agent, and do the best for their buyers and sellers. They just fail out of the business.
I think I took some bad advice when I listed my house and priced it too high. In June, houses were selling in one day. The market has cooled since and buyers have more options.
Anyway, I want to do some more staging, new pictures, and lower the price. By and large, what do potential buyers think when they see this? Will it produce more interest or will it make me look vulnerable? Both? Neither?
A price drop on a house that was originally overpriced makes me, as a buyer, think that the owners now actually need or really want to sell the house, rather than putting it on at a "test the waters" price. Of course, if the house was overpriced, and the price drop is very small, I don't pay much attention. The problem is that you've missed the spring market, and interest rates are rising. Not to mention this ridiculous situation with Congress gridlocked holding up some mortgages, and scaring some buyers. If I were in your shoes, and could afford to wait, I'd consider telling your realtor to get it out of MLS, and try to get any trace of it having ever been listed eliminated from MLS and the internet sites. Then I'd consider staging it and planning to put it back on in the early spring as a fresh listing.
I ran into the realtor that advised me to price my house as it is. She asked how things were going and told her that it was slow and that I was thinking about lowering the price. She said to hold steady on the price because of another house in my subdivision that recently closed and the house across the street from me was three weeks from closing at a price that would help the value of my home.
I live in a somewhat unique, urban area that has very large lots (one-third to half acre). In my subdivision there are two other properties that are for sale. One is foreclosure. I saw the inside of it and it is awful. They enclosed the garage, and it looks like without permits. They did other upgrades, but never finished them. There were several things that were in disrepair and the backyard was rather ugly. This house is priced 6% lower than my house.
The other is a short sale. I actually went and talked to the homeowner a while before I listed mine. She has the same floor plan as mine, but 400 more square feet because the garage had been enclosed...sort of. Like the other house, the enclosure was not done properly and the owner said there are a lot of things wrong with the house. She said it was really bad and, although we talked for quite a while, she never invited me in. There was, however, a detached garage built. This house is priced almost the same as mine - just a couple thousand lower.
Of these three homes, my house is the only one that is, what I would consider, turnkey. Other than some updating, perhaps, there is nothing wrong with my house. I have a pool and nice backyard. I can't imagine someone who desires this type of property passing mine over for the other two for the price.
The other realtor told me to hang in there and that there was a lull going on right now because the mad rush to get into a house before school started was over and that this was typical. She was emphatic that my house is priced appropriately.
My house was built in 1988. By local standards, that is old. Although my property has some unique attributes, I think the person who would be interested is not our market's typical buyer. The average buyer here seems to want something built in the last 10 to 15 years.
I'm not sure what to do now. Have I overpriced my house or do I just have a narrower share of the buyer's market?
As a buyer (been looking for a place for almost four months now), I see this a few different ways.
1) If it's a huge reduction right after listing, I assume there was a mistake with the listing price (typo maybe - or someone who quickly realized they were overpriced). This wouldn't turn me away from a seller. Mistakes happen.
2) If it's a huge reduction a few months after listing, I think the seller is desperate. Again, this wouldn't turn me away. In fact, I might be more interested because if they really want to get rid of the place, they might be more willing to negotiate.
3) If it's a steady stream of reductions smaller over a few months, I think the seller is probably not seeing any interest and hoping lowering the price gradually will attract people. This option doesn't turn me away, but it does make me more likely to wait a while just to see how far they will go.
The ones that I try to stay away from are the ones who haven't lowered their listing price at all over time. I figure those are likely the sellers that aren't in any hurry to sell and won't be as willing to negotiate.
OP, no one can tell you if you are priced to high, unless they are in your market place and know the neighborhood. But as others have pointed out, over-pricing a home can cost you just as much money as pricing it at the bottom of the market, maybe more. And, if you drop the price by bits and pieces (that can be anywhere from 5K to 10K, depending on market), it's not going to catch anyone's attention, because it will be remembered as the over-priced listing from day 1. ("That seller is crazy.")
Ask yourself, are you pricing your home to sell or trying to squeeze every dime, betting someone will see it and make an offer at your "mental bottom line?" The number of showings you receive are critical, regardless of current market conditions. If the market changes, it's imperative you change with it. If you are not getting any showings, your question is answered. If you are getting good traffic or your agent is fielding calls, you are in the right range. But if you are seeing only a stray showing, hello? Do you really want to sell?
If your competition is a short sale and a foreclosure - guess what? Short sales and foreclosures are your market, especially if there aren't any solid closings withing the last 60 - 90 days. It's a sign your neighborhood is starting to turn and values are heading down. Ask anyone that's upside down, chances are after they bought, the neighborhood started to go, one by one. If that IS a new trend for your neighborhood, time to price it to your lowest possible price to get ahead of the curve. Remember, we don't hear about foreclosures/late payments on the rise until 30 - 60 days after the fact.
In my area, we are seeing signals we are at the cusp of becoming a buyers market. If that's the case in your area, get ahead of it. The sooner you do it, the higher the net.
Okay, I've been told by two people my house is overpriced. One was an appraiser (did not do an official appraisal; just talked to me about it) and the other was another realtor. Prior to listing, yet another realtor advised me on a lower price.
I'm not sure why the realtor that advised me to begin with was so wrong...she's been in the local RE business for a long time and is (she said) very familiar with my subdivision.
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I'm not sure why the realtor that advised me to begin with was so wrong...she's been in the local RE business for a long time and is (she said) very familiar with my subdivision.
OP, that is how some agents get listings. They promise that they can sell your house higher than any other agent can. Then once you have signed the contract, they try to get you to reduce the price to a level that will sell.
OP, that is how some agents get listings. They promise that they can sell your house higher than any other agent can. Then once you have signed the contract, they try to get you to reduce the price to a level that will sell.
I am aware of this and was concerned that that was the issue. She seemed very sincere, but past experience has told me that I don't always see the negative underlying character of the person. I'm glad that I did not sign with her. Either she is giving bad advice or manipulative. I still don't view either way except that that is seems to be what the facts indicate.
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