We listed a new home for a client last year in a beautiful community. This client came to our office and asked us to list his home, but was very set on listing it at a certain price, He was adamant that this was the lowest he could list it for and still make a little profit. Both of us thought the price the client wanted to list at was about $10k too high to be competitive with the market in that community, and we warned him seriously about the dangers of listing too high to start with.

 So what happened with that listing you ask? Well..we'd love to say that it sold at the asking price, but as with many other homes that start out listing overpriced, it is still sitting for sale about 9 months later and now listed with another broker at over $10k less.

 What we tried to convince our client of from the beginning is that The old method of "Let's list it at that price, and if we don't get it sold within a few month we will start dropping the price" has some inherent flaws. There is a Ripple Effect of sorts, and this is something we have learned to take seriously when we list a property for a client.

  We always feel it is our responsibility to perform a CMA (Comparable Market Analysis) to see how any home we have as a potential list compares with current and recently sold properties in the area. Not just a pricing analysis, but taking into consideration other assets such as views, swimming pools, attractions, etc., and what the time on the market has historically been for comparable properties.

The ripple effects that we have seen when overpricing a property at our client's request are:

• The worst thing is the "New on the Market" advantage is quickly lost as less people want to view the property because it is priced too far above the competing houses in the area that are for sale. Impossible to count how many showings are lost in the first few weeks of the listing because of this one factor alone.
• Ripple - The client many times only wants to drop the price after a few months of "trying" to get their price. Then they want to drop the price a few thousand which still makes the house listing price un-competitive with the market. Now the house has been on the market for 60 days already!
• Ripple - Another month or so passes and the house still sits there. Many people still won't look at it because they feel even with negotiations it would never get into their price range (definitly not the way to go about it in our opinion.) Plus the price still isn't low enough to get into their "search" price range and doen't even show up. Easy to count how many homes have sold in the past 60 days in the price range the listing should have been listed at. One or more of those home sales could have been the listed home!
• Ripple - Time drags on, and the client wants to drop the price a few more times over the next three months. The home has been on the market for 6 months, with few showings and little interest. The client is frustrated with the listing Realtor. The Realtor is frustrated with the client not listening to them in the first place, and nobody has made any money.
• Ripple - The listing brokerage and Realtor has lost hundreds if not more dollars in advertising, open houses, gas, etc.
• Ripple - The listing Realtor's average time on the market for listings is drastically effected to the negative.
• Ripple - The listing Realtor's reputation could possibly be tarnished and potential referrals and future sales lost as a result of just one overproced listing.

There are more ripples, but you get the idea. Things can go bad, but with this scenario it's like a slow grind. The thing is...the house may not sell right away even when priced right because of countless other factors, but listing at a competitive price that is on target is very important. It's also a high motivation factor in getting the property sold quickly.