Had Hamlet been around today and worked in real estate, he may have said something like, "To price high, or not to price high, that is the question. Whether 'tis nobler in in the mind to suffer the slings and arrows of outrageous real estate prices..." Okay, so that might be a stretch.
To price high or not
Almost all sellers I meet with go through the same though process. When I tell them the facts about pricing high (see my previous blog entry), there's always that little devil sitting on their shoulder making them think that someone else will be agreeable to their higher-than-the-market-will-bear price.
This is the idea that a lot of sellers tell me, "We'll just reduce the price later, but I really want to try at this higher asking price.
The problem with this statement, although it seems harmless enough, is huge. In real estate, there's an inverse relationship between time on the market and the price at which a home will sell. The longer a home sits on the market, it becomes what we in the business refer to as "shopworn." It starts to lose its appeal and you are forced to reduce your price just to get some new interest.
Well, you already agreed to reduce the price if no one took the bait early on, so what's the problem? Many times when I consult with sellers, our difference in price ranges from $5,000-$15,000. The first price reduction I normally recommend is from $5,000-$10,000, depending on the circumstances. Then, if there's still no interest, the price keeps coming down. Why put yourself in another position to make another mortgage payment, utility payment, insurance payment, and maintain the home when you don't have to? If you price your home correctly in the first place, you'll greatly increase your chances of selling within the first month of being on the market and be able to move on with your life.
Buying a home is an emotional decision for most people. If a home has been sitting on the market longer than others around it, buyers will begin to wonder why no one else has liked it enough to buy it. They'll start to question its potential problems and the costs that may be involved to get the home in a good condition. The scary part for the seller is the buyer will make all of these assessments before even seeing the house!
In the next entry, I'll talk about getting an offer in today's market.
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