As the glut of foreclosures recedes, many "normal" sellers are hoping to cash in on the absence of distressed, low priced properties. With the current dearth of REO competition, a new mindset is emerging like the tips of crocuses poking through the melting snow of spring. Some sellers, optimism buoyed by rising market values, are convinced they can set their prices high and come down a wee bit, if absolutely necessary.
Sellers adopting this mindset will be making a serious mistake.
The temptation is huge for those who've been held captive in their homes due to the collapse of the market. For numerous reasons, many really need to liquidate their properties as quickly as possible. Causes include business failure, loss of jobs or reduced income, declining health, retirement and the like. Truth be known, many actually needed to sell last year but were unable to do so because mortgage balances were higher than market values. With prices in our area increasing since April, 2009, some have regained precious equity and, no longer faced with a dreaded short sale, are greeting the new day with a "FOR SALE" sign proudly displayed on their front lawn.
Regardless of the specifics, the bottom line for these sellers is always the same: they need to sell soon AND get as much money out as possible.
Therein lies the crux of the problem. They typically want more than the market will give. It's human nature and totally understandable. Unfortunately, with the market still very fragile, this perceived "need" can lead to dire consequences. The primary issue with homes priced too high is not that they don't sell right away or even for less than list price. They often don't get visited ... at all. Sellers who list too high may end up lonely, buyer-less and singing Patty Loveless' hit ballad:
"Lonely days, lonely nights,
Missing buyers, with all my might.
Wanting you to stop on by,
Lonely days, lonely nights.
When you're gone this house gets lonely
And talkin' to myself ain't company ...
And nothin' seems to stop the tears from fallin'
Feeling sorry you're not here to buy from me ..."*
No visits = no offers. And, just like a loaf of bread, once your listing grows stale, count on it ending up on the discount shelf and selling for less.
And there's another ironic twist here as well. With the advent of state-of-the-art Internet marketing and "Virtual Open Houses," sellers are pushing hard to have their listings showcased on as many sites as possible with as many pictures and virtual tours as allowed.
For homes that are overpriced, however, extensive Internet marketing can actually make the problem worse.
Buyers can now view homes online from the comfort of their living room or on their iPhone and quickly determine whether or not they're priced correctly. And regardless of how nice a home looks or extensively it is showcased, if buyers believe it is overpriced, they'll simply pass. And currently, there are many other competitively priced homes out there that will get the nod instead.
Not fair? Maybe. Real? Absolutely. So a word to the wise is in order. Because, trust me, you don't want to end up singing the last line of Patty's song:
"This is the loneliest I think I've ever been."
* Lonely Days, Lonely Nights by Patty Loveless, lyrics modified by Carl Medford