Correct Pricing: the Big Factor

Explaining the current real estate market has been a challenge. Both buyer's and sellers enter the market with ideas of how it should be. Working in the business every day, we see what happens when either home buyer's or seller's establish their view of the market and refuse to see the market for what it is, not how they would have it be. This isn't hard to understand. What usually happens? Most often, the market shows that it is the force to be reckoned with. Those who refuse to get in line can occasionially win out, not unlike a lottery winner, the odds are stacked against you. As an agent, trying to verbalize how the market has been to sellers has been interesting. Competition from "fire sale" properties has been setting the tone in many markets. The following graphic is an EXCELLENT visual example of what the market looks like to me. Sellers often struggle, because they compare listings that they see on the market. After a listing appointment, we may have to give the big let down talk of what a home should be priced at to attract an offer. Many factors are involved, seller motivation and equity are considered. After our sometimes disappointing talk, they'll drive by a home or get information online and say to me, "Look, they're 'going for' $XXX,XXX!" Its as if they don't understand that people can ask for any price. The current market in most areas favors a realistic pricing model, compared to the market 3 years ago where it was perfectly acceptable to overprice a home by 15% to see if any buyer's would "reach". Many times they did. Now buyer's generally are not eager to pay premiums for real estate. Recently we had a successful experience where someone selling thier home was behind on thier mortgage and several months behind on association dues. We knew that if we couldn't get the property sold quickly, that the seller could loose the home to foreclosure. We suggested a price that we felt the market woud support, but no higher. After getting shown a good amount for 45 days, multiple offers came in and the home was sold for asking price. Our strategy worked perfectly. At the closing, the seller advised me that the bank appraiser told him the home was priced $10,000 too low! I'd never heard of anything so crazy! I was shocked and very angry. The seller was angry at me. I tried to explain how the market is today, based on the graphic below, there were lots of places price above his, but they were just sitting on the market with very little showings for 6 months and more. Buyer's can go through the same thing by putting in offers that are significantly lower than the market value. As their agent, we obviously want them to get a great price, but going around putting in ridiculously low offers usually yields the buyer nothing but a headache. The Pond - Where is YOUR home in the pond?