I have sellers struggling with the price of their house right now. The last time they bought or sold a home, they hit the pause button on market dynamics . Those old dynamics said house values would continue to increase over time. What's happened today when this news reaches them? Their "assumptive world" is shattered and its a challenge to integrate this new world.
Let's say you bought a house back in 2002 for $317,000.
It was listed at $319,000 and needed work.
You took out a $50,000 line of credit to update the kitchen, buying all new appliances. You repainted and enhanced the landscaping.
You are stunned when I suggest the house list for $324,000 TODAY based on market comparables.
Here's a shopping analogy to try and make sense of things.
Imgine you recieved a $75 gift card to Nordstrom's for yoru birthday and you head ot King of Prussia Mall. You find a table of gorgeous cashmere sweathers and one is exactly the color and size you want.
BINGO! The price is $75 so you head to check out.
On the way you see another table of sweaters with a sign that says CLEARANCE.
Hmmm, worth a look. These are sweaters originally sold for $200 and are now marked down to $75.
What do you do? Buy the $200 shirt for $75, or buy the $75 shirt for $75?
Home buyers in this market have a similar choice to make when they are looking for homes. Except they have the option of buying the $1 million home for $750,000 or they can purchase the $600,000 home for $750,000.
Too often, sellers put a high price on their home with the expectation of negotiating if it doesn’t sell at that price, but the point is this: in order to sell, a new listing must hit the market on the clearance rack on Day 1.
Consider to the seller who says they “don’t really HAVE TO SELL.” They feel they are in the drivers seat, but actually they are not.
They are competing with sellers who absolutely, positively have to sell and will do whatever it takes to do so.
As one colleague puts it, Selling a home in this market is a price war and a beauty contest.
Excerpted from interview : Gary Keller and Shaun Rawls. jroosevelt@kw.com
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