Over- priced Homes, Desperate Sellers, Cycle for Disaster and Crisis

I just could not believe my colleague ask me to provide a CMA to one of his clients.  During the summer of 2008, I listed one of my very favorite properties in Loudoun County.  It was then owned by a former president of The American Broadcasting Company. My colleague happened to drop by the office one day, after previewing at least a half dozen listings.  In his tired and exasperated voice, he said he had clients coming from NY who were trying to find a special property which allowed them enough privacy for breeding standard poodles.  They did not want a cookie-cutter home!  I knew I had the perfect home.  Anyway, long story short, they bought it and now, less than 2 years later, are needing to sell.  Like many of us baby- boomers, our parents need us to help them in their older age. They now are planning to move South.

Apparently they wanted both of our opinions and for each of us to do a CMA without any feedback from one another.  This unique property was going to be difficult to find comparative properties. In-depth research will need to be done to be able to give them the best chance of selling and having the property appraise.

  It was built in 1982, a Cape Cod, and located on 7 acres in a rather remote part of Loudoun County, Virginia.  Anyone who knows Loudoun, knows that homes with acreage are in demand if they are horse properties.  During the high times of our real estate market, everyone wanted big McMansions with lots of acres, but now, many of these same properties are selling as short sales, REOS, or where prices have been drasically reduced.

It took me several attempts to feel comfortable in giving them a price range which I felt would be one they could sell at, not a price range they will want, though!  It is so important that sellers understand that they MUST price their home correctly.   Pricing it Right is the only way to get your home sold for the most money and in the time frame you expect.

I found this article which addresses what I know is accurate and something I will need to do... deliver the news to the Seller.  I realize they will not be happy, I certainly would not, but the price is what it is and what the market will require it to be in order for it to sell.

                 I imagine the conversation I intend to have with them will be similar to one a physician must have when a patient must be told they have to have an operation to save their life. 

  It will be shocking, time will be needed for the news to sink in, and yes they might want a second opinion. However, my job as a Realtor and my responsibility is to provide them with facts and statistics to support my claim.  I must be the professional I am, speak the truth, educate my clients, and most importantly, be true to my findings.  Accepting an OVER-PRICED LISTING is not fair to anyone, Not the Seller, and especially not the market.  It is a Formula for Disaster!!

Our market is getting better, inventory is down, market stability is beginning to happen.  It is our job to make sure we keep our listings priced correctly so that we see our housing market healing. 

 Sellers, are you ready for the next housing boom?

Here's a great article by Paula Hathaway that backs up the reason to price your home aggressively in today's market.

Via: Paula Hathaway

OVER PRICING HOMES = HIGH INVENTORY + LESS SALES + DESPERATE SELLERS = CONTINUED HOUSING CRISIS: A FORMULA FOR DISASTER IN A FRAGILE MARKET PLACE!!!  

We MUST do in-depth research before we price properties!!! ....and we MUST price properties as if our lives depend on it.(...because they do!) If we don't face over-pricing head on, we will see the inventory levels climb like never before! Not only that, the desperation seen and felt by huge numbers of sellers that we witnessed during the downturn in 2008 will likely re-appear! In many markets there are still great numbers of desperate sellers.

    OVER-PRICED HOMES = HIGH INVENTORY +  MORE DAYS ON MARKET + LESS SALES + DESPERATE SELLERS = CONTINUED HOUSING CRISIS.

In her last blog post, she mentions the above formula to the umpteenth agent who said he would take an over-priced listing but would schedule a reduction in the agreement in 30 days or 60 days. There are still huge numbers of real estate professionals who do not understand the importance of correct pricing---and we direct the whole real estate market; or at least we are supposed to!

In her blog, "HOW DO YOU HANDLE A SELLER WHO WANTS YOU TO OVER-PRICE THEIR HOME ?..." I was amazed at how many agents feel it is ok to over-price a listing "for a short time like 30 days" ...let me remind you all that the best time to sell a listing is in the first 2-3 weeks on the market! Over-price it and you miss the best selling time!!!

Even a small amount over the correct price of a home will keep it on the market for too long! We can not afford this in this housing climate; people are desperate now (and more will get there)....but there are buyers out there and they are looking for bargains, even here, where the average income usually very high."

I will be sure to post the listing when I get it and hope the Sellers will listen to why over-priced listings do not help you sell your home, it helps sell other properties listed in the correct price range!!