Hi Stephen,

I totally agree with you, and what gets me is that it is so simple. If all sellers and seller agents would stop over pricing I think we might come out of this market cave in a lot sooner.

I have a colleague here who has been trying to sell his property for what seems like years. He puts it on the market at an uninformed price, and when it doesn't sell he takes it off for a while. Now it's back on the market and every week he reduces the price 1.48% with the result that nothing happens.

It is funny how we can get caught up in the thousands of 'fears' we are all susceptible to and the 'what if's' lead to the 'would have, should have, could have's'.

Great Post!!! Sellers hire a Realtor because we are professionals. Why do they NOT listen when we provide them with FACTS!!!

Good Post and so True!

Right on the money Stephen, could not have said it better myself!

Stephen: Great post and how appropriate to address on my listing appointment this afternoon. Thisseller's property had its value decreased over 40K in the last year!! So I have my comps ready and all other ammunition to support my suggested price point. Guess what: I am also taking a copy of your post with me!! Thank you!!!!

Great post Mr Munson!  I couldn't agree more.  I've been trying, mostly without a lot of success, to get my sellers to price their homes a bit under market to encourage the "feeding frenzy" and generate multiple offers.  Most are too chicken to do it!

It still amazes me after 11 years in this business that some sellers still go against the advice of their Realtor (who should be their trusted advisor), and price their homes above market value. Why contract with us at all if you think you know more than we do.

So, so true.

Michael #17 story is perfect example!

Thanks to you both.

Great comments!  I was just called by a seller to go list thier over priced house tomorrow.  I thank you all for your comments.  It was never so true as it is in this market.  With banks and short sales as their competition, the sellers HAVE to be realistic on pricing or the houses just won't sell.

Great comments!  I was just called by a seller to go list thier over priced house tomorrow.  I thank you all for your comments.  It was never so true as it is in this market.  With banks and short sales as their competition, the sellers HAVE to be realistic on pricing or the houses just won't sell.

It's always helpful when I can share with clients another voice giving the same advice. Thanks! A hook that's too far above the water won't get any bites!

Stephen,

I absolutely agree! Too many clients want to stretch the limit in todays market. Then they miss that first week of heightened interest for a new listing. After several weeks, the property falls into the mainstream of listings and then they decide to "slowly" come down on their price. When the seller finally gets to where the market value should have been a month has gone by and there just aren't as many showings or lookers anymore. So, I agree, price that puppy where it should be from the beginning!

Buyers want a deal and sellers are sometimes too proud of their homes. No equity means a short sale and enough equity means a possible good listing with dealing with the banks. We all want a motivated seller not a homeowner that is unrealistic. What makes a seller motivated? Thats the question you need to answer and find that person with strategic data nurturing...

You speak words of truth.  No matter how often that is explained to customers, it is very rarely heard.  My last customer that understood this sold in 11 days.  My other customer that did nothad their home sitting on the market for over a year!

A major reason for the home owners not to agree with the sales agent recommended list price is the fact that their mortgage combined with the selling cost is higher than that recommended list price, and they do not have the funds to cover the difference.

They know that they are asking for a miracle, but are not able to accept a lower list price.

At that moment it is up to the agent to walk away ,what very few will do, especially if the difference is only a few percent. Their hope is that some way the sellers situation changes.

In reality the sales agent often ends up with a reduced commission to make a deal happen, by paying for repairs, home warrantee, etc.

i personally do not have a problem with that ,but I am sure many brokers do not accept that.

Dear Stephen:

You are right about the stratigy of pricing low, but how do you value a home that is in perfect condition with a bank owned that is in terrrible condition.  If the two are next to each other and you are listing both, and all else is the same except condition, what price do you put on great condition? 

Is it worth 10, 20, 30 percent more?  Give me some tips on how to do a realistic CMA between these two homes.  Thank you.

Your Fellow Realtor:

Elizabeth Lockwood

We've turned down seller's because they have wanted to overprice their home and then we just sit back and watch.  They get fewer showings and everyone is right; in the end the home sells for less than it should have sold for.  GREAT ARTICLE BY THE WAY.

Annette Murphy

Keller Williams Realty Professional Partners

Absolutely on target.  In this kind of market, an overpriced property will end up selling for a lot less, as the seller ends up chasing the price down as the market proceeds down, sometimes never catching it.  Those stubborn to list a home at the right number will certainly end up with far less than they might have if priced right to begin with, not to mention the greater time it takes and how that stress plays out for the seller.  Lives are put on hold for far too long. 

Oh, so true so true, Thank you for the great post.

Stephen: Your comments are right on!  I recently had a listing that was overpriced and the owner refused for four months to lower the price.  Because the property was not FHA approved, she even tried to convince me to RAISE the price, to attract a different type of buyer who could afford a larger down-payment and probably would not want something in that lower price range!  When the listing expired, the owner decided that it would look better on the MLS if it appeared to be a newly listed property, so she went with another realtor - at $25,000 less!!!!!  I realize, in hind-sight that it would have been better to insist, in the first place, on a lower price ... or I should have refused to list the property.  I was hungry for the listing and thought it was good for my reputation to take it, even if it wasn't priced right, hoping the owner would reduce the price after a short time.  I think it was worse for my reputation to list a property that had no offers - and to eventually lose it to another realtor. 

Great post as this is always a simple, but difficult scenario to explain to a seller. I sold my home about a year ago in about 5 weeks and for only $2,000 less than listed price. I always use my own example when discussing price with a seller.

You are absolutely correct.  Over priced homes sell every other correctly priced home.  We see it constantly, over priced homes sit and sit.  What is wrong???????with your house.  It comes down to the three C's.  If it is the right Cost, the right condition, and is void of clutter it will sell and will probably get multiple offers.  If it sits for 21 to 30 days and no offers come in, something is wrong???? Find it and correct it.  If the seller doesn't believe you, then don't just keep it there  till it goes into the pricing "spiral of death".  If you know it is over priced by what is selling, then convince them or "fire" them.  They won't like you if it doesn't sell and you won't like them if it doesn't sell.  You are the professional, act like it.  If it is priced more than 5% over market then it comes down or we walk and part friends before it gets ugly.  They still won't like you if it sells for a very reduced price down the road.  You are a professional running a buainess, and this is a business not a social club or net work.

This long know fact has escaped sellers many times. Thanks for the reenforcement. Now that we have two markets, Fairmarket and foreclosure market it is most important to educate sellers.

I agree 100%... the challenge is getting the seller to a reality checkpoint.  In my experience, they can see it in their neighbors house, but theirs (home) is "different, better" etc. 

Good post

HRay

A timely post. Thank you for your words, they are reinforcing my thoughts exactly! It is so important to educate your sellers from the beginning but often hard to get them over that emotional hump about their home's value compared to the current market activity sometimes. It is a good idea to have the price reduction paperwork done right at the beginning in case it is needed... Less game playing later when you are trying to get the reduction. 

Great post! Thank you.

I often see this happen. I am a real estate stager and no matter how great a house looks if it is over priced it will sit on the market. The homeowners are always dismayed even though they have been thoroughly advised by their professional Realtor.

It takes all three things to quickly sell a home. 1. price 2. presentation 3. location

However the #1 item, price, can offset #2 and/or #3. Even with a through explanation to homeowners it still is a huge stumbling block. Emotional response and unrealistic expectations thwart all best intentions.

I am always astonished at how many home owners determine the value of their home based on how much money they want rather than what the CMA shows it should be priced at.  The last listing call I went out on, the seller decided he needed $205,000 to pay off his mortgage and his new truck.  The CAM shows the property should be priced at a max of $179,000, but seller will still blame the real estate agent if their property fails to sell. 

I tell my agents to walk away from overpriced listings unless there is an assurance (i.e. pre dated price reductions completed at time of listing) that the seller is motivated to get their home sold. Better to let the competition list it --spend thier $$ on advertising--deal with the frustrated seller (and we all know it is the agent who gets the complaints from the seller regarding why the property is not selling) and having the competitions' sign up that shows what they can't do, SELL THE HOUSE. Then when the listing expires, and the seller is willing to discuss the REAL price based upon the market, then list it. We need to decrease our inventory not grow it with unsaleable listings.

You are correct basic economics of supply and demand, high inventory low price, even if the inventory drops I don't see banks leading the money like they did.

Amen! I see that going on in my area in Northern NJ all the time; everyone seems to price $25-50,000 over what the house eventually sells for because they bought high and are losing money on the sale to begin with. But "wishing won't make it so." I agree it's much better to price at a very reasonable level and drum up the excitement and visitors that way. I never understand why sellers are willing to deal with months of keeping their homes ultra-clean (hopefully!) and the inconvenience and uncertainty of multiple showings and few or no offers because their homes are priced too high . . . as a stager, I don't get involved with pricing, of course, but it can be hard to stage homes that are considerably over-priced. I always tell owners their agent knows the market and that it IS a very slow market in our area.

Amen! I see that going on in my area in Northern NJ all the time; everyone seems to price $25-50,000 over what the house eventually sells for because they bought high and are losing money on the sale to begin with. But "wishing won't make it so." I agree it's much better to price at a very reasonable level and drum up the excitement and visitors that way. I never understand why sellers are willing to deal with months of keeping their homes ultra-clean (hopefully!) and the inconvenience and uncertainty of multiple showings and few or no offers because their homes are priced too high . . . as a stager, I don't get involved with pricing, of course, but it can be hard to stage homes that are considerably over-priced. I always tell owners their agent knows the market and that it IS a very slow market in our area.