Seller Beware… overpricing is dangerous for your health. And ours.
We like to think that we offer great advice when it comes to pricing homes. We scrutinize the comps ad nauseam. And to play it safe, we usually have our office mates over for a look to let us know if we’re overenthusiastic, or even stingy in our assessment of our upcoming listings. The reality check has come in handy on more than one occasion.
Still, it’s the seller who sets the price. So what to do if a seller wants too much? Sellers often have an inflated view of what their house is worth. And with good reason. They’ve generally put a lot of money and time into improving their investment, and damn it, there should be a 400% return on that bathroom remodel. Right? Ummmm… not so fast.
Just about every agent in our office has a tale about a listing that starts off too high whereby the seller rejects solid offers left and right because they are just “insulting”, or “too low”. Ultimately, after much (much, much) time has passed, these same listings sell for considerably less than the first offer that was made. We call this “chasing down the market.”
Not only is it frustrating for sellers, but for agents, too. Ultimately, we’re the ones who get blamed… for bad marketing, unflattering pictures, strange wording on the brochure, not enough open houses, lack of advertising…. just about everything BUT the true reason for failure… overpricing. Sellers get frustrated, part ways with realtor #1, get a stern talking to from realtor #2 (if they are lucky), list it at a reasonable price, and voila, house sells.
“We want to be your second realtor” is a line we’ve been practicing lately (when faced with an over-zealous listing price). Sometimes it makes sense to walk away. Overpriced listings make for lots of work, and no one is ever happy.
Hey- occasionally we realtors are to blame. Sometimes good comps are lacking, and it’s an honest mistake. Or, we take a listing at an inflated price (enabling our sellers to “test the waters”) because we’re hungry for business. Or we’ve agreed to list it at the ambitious seller price, believing in the promised price drop if it doesn’t work out. When a price reduction doesn’t come fast enough, the initial shine of the new listing wanes. So the listing lingers. Thus begins the long spiral downward, with the house selling for less than what it might have received had it been put on at the right price to begin with. Overpricing can really backfire.
We generally find that the first offer is the strongest. A listing can lose momentum as time goes on. The best way to combat market ennui is with well-timed, aggressive price reductions. With any luck, the proper pricing will result in a flurry of activity. On more than one occasion we’ve seen these situations reverse course, sometimes producing multiple bids and better than expected results.
Sellers – about the worst thing you can do is “test” the market and list your home for too much money. Take a realistic look at the recent comparable sales. It’s a fools errand to price your home where you hope it will sell. If it’s too low, we’re solidly in a sellers marketplace… it will get to where it needs to be. Price it too high, buyers count up the deficiencies. Price it ever so slightly low, and they’ll be raving about all of the positives.
Which side do you want to be on?
