There are some home buyers that have been shopping for a home for a long time; long enough to know and experience when old listings suddenly come into their price range unexpectedly. It happens to almost every home buyer. The house you were eying suddenly appears on your home search radar, either in automatic email updates or on real estate websites that you’ve been scanning and surfing religiously.
About 6 months ago, I was working with experienced home buyers; buyers who had owned a condo before and a single family home a long time ago. We’ve been shopping for a home for a good 8 months of which 8 months ago, I pulled up comparable home sales of a house they were interested in. Back then the comparable home sales were telling us that the house had an approximate value of $370,000. It was listed for $379,000. Today that same house is now listed for $349,900.
If the comparable sales were somewhat in-line with the seller’s original listing price – listed for $379,000 when homes were selling at $370,000 – why didn’t the home sell?
First, the truth of the matter is sometimes when you are shopping for a home, the comparable home sales information doesn’t not tell the whole story. This house, the one that was once listed for $379,000, is on a busy street, has high taxes, and had several out-of-date bathrooms. The seller of that house should have known they would be hard-pressed to find a home buyer who would be willing to pay market value for a house that still requires some updating. Of which, updating a bathroom, even one with modest renovations could costs on average $4,000-$6,000 with conservative updates.
Second, comparable home sales only reflects the near past and not necessarily what could happen in the future. If you are shopping for a home at the start of a real estate decline, you may not see it, unless you ask your ask your real estate agent to provide you with a trend analysis, which is a market analysis with an eye towards the near future.
Sadly, the most unfortunate thing for that over-priced home seller is the possibility that she may sell for even less than $349,000. When a home sits on the market for 6-8 months, home buyers are less likely to make offers close to the seller’s asking or listing price. Why? The idea festers in their mind that if no one else has made an attempt to buy it, there must be something wrong with it or it’s overpriced. Hence the reason you are less likely to get your asking price when you over-price.
My Advice: Pricing your home to sell is not an exact science, but you have to take heed of your overall selling situation and be aggressive in your real estate pricing. 8 months ago, the seller should have listed at $349,900 and not chase the market of which, she could have walked away with decent profit.
Should have, would have and could have. It is what it is now and at the same time, I know the seller must be thinking that she at least had to try to get a higher price, but the only thing that over-pricing listings ever accomplishes is headaches and frustrations. SO, DON’T OVER PRICE YOUR HOME. I understand the need for wiggle room, but when you price your home outside of the market, you may never have the opportunity to wiggle.