Real estate term explanation "Chasing the market down"
If you price your Wayne County home high you will be chasing the market down. What I mean by that is by the time you realize that you are overpriced you will lower it a little bit. But by then the Metro Detroit real estate market value will have dropped. So then even though you dropped your price you will be over priced for the Metro Detroit real estate market again. This will happen over and over as you chase the market down. You will finally get tired of chasing the market down. You will either pull the house off the market or you will end up letting your Michigan home go for much less than what you originally listed it at.
Let's do a general example with a Livonia home. Currently most Livonia colonials are selling for about a $100 a square foot. You have called me up and asked me to list your 2300 square foot Livonia colonial. I have come prepared and showed you all the homes like yours with the same square footage, in the same shape, and in the same area that have sold for $230,000. You looked at it. But you think your beautiful Livonia home is worth $260,000. After all you bought it 4 years ago for $200,000 and put $20,000 into it. You don't want to "give your house away" You won't get any money out of the home if you sell it for $230,000 after paying the real estate commission.
But you have to sell your Michigan home because you lost your job and you are moving to North Carolina. i've known you for a long time and I don't want to disappoint you. I tell you it is only worth $230,000 but you insist on listing it for $295,000 so you can sell it for $260,000.
So I list it for you. But only one person comes through your home because there are other homes in the area listed for $250,000 very similar to yours. So after a month we lower the price to $275,000. Then in another month and a half we lower the price to $260,000. After 6 months we are finally down to $255,000 where we should have roughly started. But now the 2300 square foot Livonia colonials are now selling for $220,000. Some of the other homes that were listed at the same time have sold.
Now there are other homes listed at $245,00 and $250,000 but you won't listen to me. You want to only lower it to $255,000. After all you already have lowered your price $40,000. So now we sit with your Livonia homeon the market for another 3 monthes and you lower it to $245,000. But again Livonia home prices have fallen to $210,000.
Finally after a year and a quarter on the market some Michigan home buyer puts in a low ball offer of $175,000. We finally get it sold at $195,000
That's what chasing the market down. I have seen it happen over and over in this market. If you truly want to sell your Metro Detroit area home and you have the financial room. Price your home so it is one of the best values for the area. If you have a great updated house is the only exception to this rule and even then you should price your Wayne or Oakland County home with the market.
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