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Northridge Realtor talks about | The Dangers Of Over Pricing

By Dan Tobias

Real Estate Agent with Rodeo Realty

July 07, 2007 07:04 AM

By asking for the right price from the start, you will avoid the many dangers of overpricing.

How do you determine the right price?

1. Recent home sales

2. Demand for homes in your area

3. Prices of similar homes on the market, and how long have they been on the market

4. Size of the house

5. Size of the lot

6. Special features

7. Landscaping

8. The kitchen (is it tile, or granite, what type of condition are the cabinets in)

9. Is the house freshly painted?

10. these are just a few examples

Here are some of the dangers of over pricing

•1. Scaring away the buyer- Buyers that can afford your home may not show up to see it. Why would they waste their time on an over price home?

•2. You're going to help sell the neighbors home- the buyer is going to feel that your neighbors home is a better deal, because it is priced to sell

•3. You will miss out on the immediate demand- the first 45 days is going to have most activity If your home is over price you will discourage potential buyers, from coming to see your home. They know that since it is a new listing, in most cases you will not be too willing to budge on the price. They will wait it out for the price to come down.

•4. You're taking a chance with your home not appraising- You decided that you are going to list your home at X amount against your Realtors suggestion. You get an offer that you feel is acceptable. Now comes the day that the appraiser appraises it. He comes back at a lower appraisal. You talk to him, but he will not change his appraisal. You get a second appraiser to appraise your home, and he also comes back with a lower appraisal. Now you have one of a few choices. Reduce the price to the appraised value, The buyer comes in with more down payment money to cover the difference ( Does the buyer have the money to do this) You Renegotiate with the buyers to take back a 2^nd on the property for the difference , the buyers decide to cancel the contract due to it not appraising.

•5. Your timetable isn`t going to work- You have set a timetable to be out of your current home, and in your new one by a certain day. It could be because of a job transfer, a new child on the way, you want to move during the summer months while the children are out of school. Many different possibilities. By pricing your home too high it will throw off your timetable., and frustrate yourself.

•6. You would have sold your home for more if you would have priced it right at the beginning- This is the one big reason sellers of over priced homes are upset. If they only would have priced their home right. In a market where the home values are coming down. By overpricing your home, and doing price reductions over time might cause you to sell for less than you would have if you would have priced it right at the very beginning.

Are you looking to buy / or sell a home in Northridge, Granada Hills, or Burbank Contact Dan Tobias

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Jay Wurlitzer

Distinctive Realty - Marlborough, MA

I agree with you 100% Dan - price is the number 1 factor in a declining market. If it's not priced right it just won't sell and you will end up chasing the market as prices go down.

Jul 07, 2007 07:17 AM

Cheri Smith

Prudential Gary Greene, Cypress TX - Cypress, TX

Realtor Prudential Gary Greene

I have sellers that have made up their mind what their house is worth and no matter what I tell them they insist on listing at the price they want for it. Even houses completely paid off. Then when it sits there for 12 months they act like it's my fault. This is very irritating to say the least and it shows they don't trust me, they don't want to listen, they don't trust the numbers. You can show them on paper that the most a house sold for in their neighborhood was $100,000 and was larger and newer than theirs and more updates, etc, and they STILL think they can get $120,000 for theirs. When you don't get that for them they move on to the next agent. I have met so many sellers like this and I'm pulling my hair out trying to figure out where the disconnect is.

Jul 07, 2007 07:21 AM

TheMillsTeam YourSebringRealtors

Advantage Realty #1 - Sebring, FL

863-212-5441

I have a sheet of paper showing two identical photographs of a nice BMW. Each car as the same spec's and features. One is priced at $49,999, the other one at $59,999. I give my seller's a mock check over $60,000 and tell them to go themselves a Beemer. When they refused to pay $59,999, I ask them why and they go "aaahhhh".

I haven't tried this too many times yet but it has worked so far.

Jul 07, 2007 07:36 AM

Provadus Home Loans

Provadus Home Loans - Marietta, GA

Technology bringing you home.

Absolutely, I hear more clients tell me that the house they first wanted was way over priced. It seems that over pricing is the number one reason why certain homes are not selling!!

Jul 07, 2007 07:51 AM

MAUREEN STACCATO

Springfield, MA

You got that right!

In this market being overpriced is a dead wish. The listing will sit and the next thing you know, you are having to lower the asking price then eventually, buyers will want to know what is wrong with that house since it's been on the market for so long.

Jul 07, 2007 07:53 AM

Grant Howell

Alex Lowery Real Estate - Frisco, TX

Broker/Owner 214-234-6901

Thanks for the info. It's always nice to read a blog that is informative and adds value to the commuinty.

Jul 07, 2007 08:04 AM

Dan Homan

Coldwell Banker Ellison Realty, Inc - Ocala, FL

I agree 100% that price is the issue. Your items #4-10 while they sound nice are the reason why homes are over priced. I don't know how many times people try use these items to jack up the price. The issue is not heavy duty nails, it is location. Number 4 should be proximity to employment schools and shopping. If you are in Mayberry, you should also be comping prices in Mt. Pilot, way before adding value for a fresh coat of paint.

Jul 07, 2007 08:10 AM

Marcus Valdez

Berkshire Hathaway Rocky Mountain Realtors - Fort Collins, CO

I always use the ar calculation that is helpful to an overpriced seller. (Absorption Rate)

Jul 07, 2007 08:30 AM

Dan Tobias

Rodeo Realty - Northridge, CA

Northridge Real Estate Expert

Jay- Thanks for the kind words

Cheri- Personally when I do a listing presentation, I give the sellers permission to not hire me, however I also let them know that if I don`t feel that I am the right realtor for them I won`t take the listing, and I will introduce them to someone else that I feel can serve them better. I say this, because I will not take a listing that is way over price. Because in the end it is my reputation that is on the line. Last thing I want is for them to bad mouth me to other people. If they are not being realalistic on the price than it is in your best interest not to take it. In the end it will cost you a lot of money advertising an overpriced home, and it will cause the both of you undue stress.

Andrea- That is a great suggestion Thanks

Maureen- there`s a point I forgot to make

Grant- Thank you for taking the time to say thank you

Jul 07, 2007 08:35 AM

So Dan Homan let me ask you? Are you saying that if you have two houses next to each other one is on a 2,000 square foot home on a 6,000 square foot lot the house has been painted inside, and out, the kitchen has been completely redone new granite, new cabinets, new appliances, the landscape is incredible? Then you have the exact same house next door it is falling apart nothing has been fixed, the lawn has not been cut. Are you telling me that they should be priced the same? That my #4-10 should not make a difference in the value of the house???

I don`t think that it gives it a reason to be overprice, however I do believe that someone that has put the money into fixing a house should have the right to get more money for theirs compared to one that is not fixed up

Jul 07, 2007 08:58 AM

Joe Zapata

Keller Williams Realty Media World - Burbank, CA

Your Burbank Real Estate Expert

Great post Dan, all great things to take into consideration when pricing. But you did miss one major factor COST.

The cost to you the agent for photos, virtuals, open homes and all other marketing material. Our time and dollars now more than ever need to be spent wisely and on good listings.

I would rather not take a listing at all than to waste my money marketing an overpriced one.

There comes a point when the sign in the lawn is not worth the price of the listing.

Jul 07, 2007 10:33 AM

Cyndee Haydon

Charles Rutenberg Realty - Clearwater, FL

727-710-8035 Clearwater, Beach Short Sales Luxury Condos &Homes

Dan - great post - all good points in todays market. Thanks for sharing them here.

Jul 07, 2007 05:30 PM

Dan-

All I am saying is that the house that has no deferred maintenance issues will sell at market, the home lacking proper and normal maintenance should be listed below market. The way most agents price, they let the sellers convince them that the maintained home should sell above market and the unmaintained home should sell at market. Way wrong, market is for well maintained homes, deferred maintenance should reduce the price.

Jul 07, 2007 05:46 PM

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