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It’s NOT Location, Location, Location… It’s Price, Price, Price!

By
Industry Observer

I listen to a lot of news radio... I am a big NPR fan and, in fact, my cousin is the Program Director for New Hampshire Public Radio.  So it should come as no surprise that the local public radio station and other news radio fare is what I listen to in the car.

Last Friday, one of the stations reported on a study done (I believe the reporter said it was conducted by Trulia, but I was driving, so I could not write it down) that of the houses currently on the market nationally, that 25% of them had taken at least one price reduction.  Now, what that report tells me is that 25% of the homes currently on the market were not priced properly when originally listed.

Has the market in your area rebounded so strongly that we are back to "testing the market" by pricing homes higher than their market value in the hopes that someone will overpay?  Are the appraisers in your area still so lenient in their appraisal values that even if you get an overpriced offer that it will appraise for financing (unless, of course, you're expecting a cash buyer)?  Or are 25% of real estate agents just suffering from short term memory loss or a longing for nostalgia?

I know that the old adage says that the three most important things in real estate are Location, Location and Location... but for the past 12-18 months I have found that even location is not a major consideration in getting a listing sold if it is priced properly.  Overpricing a listing guarantees one thing... your listing is likely to grow stale on the market and, as you reduce the price, buyers will sense desperation and offer even less than they might have had it been priced similarly from the start of the listing.

In a rational market, achieving the best possible sales price requires advising sellers of the realistic market value of their home and helping them understand why pricing it properly is in their best interest

It's our fiduciary responsibility as Real Estate Agents and Brokers!

Comments(12)

Ken Jansen
Prime Development Land CO LLC - Overland Park, KS
REALTOR, CRS, 913.908.2215

The David Knox videos pricing your home to sell are a great pre-listing tool to utilize. He explains it in roughly 19 minutes.

Jul 12, 2009 12:36 PM
Gordon Sloan
Group1 Real Estate, selling houses in Salt Lake City Utah - Salt Lake City, UT
Salt Lake Homes For Sale, Salt Lake Real Estate

It has been amazing to see families move further and further away from their own areas of activities and interests, just so they can take advantage of a large savings on a foreclosed home.

I'm not getting it.

But I always looked at a home as a place to live and raise a family.

I see a lot of folks that are looking at the family home as an investement.

 

Jul 12, 2009 12:51 PM
Tim Rogers
Coaches Corner Radio...The Real Estate Guy - State College, PA

Trulia has a statistic at the moment (maybe part of the same story you heard) that says home sellers have cut their listing prices by a total of $27 Billion dollars as of July 1, 2009.  Not sure the time period they were using to make the comparison but I came across this factoid on Friday.

Tim

Jul 12, 2009 01:11 PM
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Steve:  Overpricing a listing is cruel.  It hurts the seller by extending the time it takes for his home to sell, and will cost him money in the long run.  You raise some great points, Steve... thanks for sharing.

Jul 12, 2009 01:30 PM
Richard Weisser
Richard Weisser Realty - Newnan, GA
Richard Weisser Retired Real Estate Professional

Steve...

I have had to have the "hard talk" with sellers many times now, and it is actually get easier. I just tell them that I can't help them by overpricing their houses, and that if we are realistic, we have a good chance to move the property!

Jul 12, 2009 01:37 PM
Carol Smith
Casmi Photography - Mebane, NC

Steve - I still own 4 houses in Ohio.  It's a fact, not bragging - believe me.  I have recently started to get unsolicited property tax reductions on all of them.  So what's the problem?  The tax assessor's value on each of them has fallen a MINIMUM of $12,000 per property.  The highest decline was $18,329.  So ... what was at least holding steady in tax value is now ... in the hopper.  I owe more on them than the tax values and the appraisers in that area have historically used the tax valuations as a base to work from.  Pretty much ... I'm sunk financially unless something in the Rust Belt changes pretty quickly.  Right now ... I've got 2 of them on the market and can't even get short sale offers.  Pricing appropriately is paramount - no doubt.  But what to do in those markets where you can't even give the keys away?

Jul 12, 2009 01:54 PM
Robert Schwabe
Herron Real Estate - Orange Park, FL
Orange Park Real Estate

Steve  - I still have people trying to test the market. I tell them that we need to get it priced right or not put it on the market at all.

Jul 12, 2009 02:46 PM
Rick Schwartz
William Raveis Real Estate - Danbury, CT

The key is to have the strength to walk away.  I do not believe that the Realtors who are taking overpriced listings don't understand the market- they just get to the moment of truth and cannot dig deep enough to say to the client.  

The single most important thing I can offer you as a Professional Realtor is to be brutally honest. Some out there might tell you what you want to hear but that would not be in your best interest,  Here are some hard to swallow, yet incontrovertible  facts:

  • What you paid for your house is irrelevant
  • What you want for your house is irrelevant
  • What you need to get for your house is irrelevant
  • What your neighbor got for his home 2 years ago is irrelevant

The only thing that is relevant is what educated buyers are willing to pay for your home - and I've gone over that with you already.  If we price it below market value it probably will sell quickly. If we price AT market it MIGHT sell in a reasonable time. If we price it over market it probably won't sell at all."

If you give it to them honestly and straight (in your own words of course and they still won't listen, you should probably walk away and let someone else list and not sell it -  Unless you really want your sign up - then it's perfectly OK to do something that is not in the client's best interest.

 

 

Jul 12, 2009 03:12 PM
Jason Crouch
Austin Texas Homes, LLC - Austin, TX
Broker - Austin Texas Real Estate (512-796-7653)

Steve - I agree wholeheartedly!  This old adage has changed dramatically in the past couple of years.

Jul 12, 2009 04:15 PM
Carol Culkin
Diamond Partners Inc - Overland Park, KS
Overland Park Residential Real Estate

Steve - If overpricing in this market could be considered a sin, lots of agents are probably going to hell.

Jul 12, 2009 04:44 PM
Sally K. & David L. Hanson
EXP Realty 414-525-0563 - Brookfield, WI
WI Real Estate Agents - Luxury - Divorce

We don't buy listings and before last week when we become KW agents, there were several agents in the office that made buying/over pricing a regular practice.   We don't work expireds....or didn't...that may become more attractive now that sellers don't associate us with people who over price and figure we all went to the same school.

Jul 12, 2009 11:37 PM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Steve,

The old 3 L's of real estate should have been thrown out with the old mls books.  If it is not priced right it just will not sell.

Jul 13, 2009 02:17 AM