The Bi-Polar Side of Home Pricing

By
Real Estate Agent with ShowMeOKC Real Estate Pros of KW Elite 148333

As indicated by the frequency of my ramblings on the topic, proper home pricing is one of my largest hurdles when meeting with hopeful home-sellers. Common sense tells me that will never change, but I feel that helping those who want to buy or sell homes in Edmond better understand the market is not only my job, but it's my duty.

Business Week just published a pretty interesting story about the tendancy of homeowners to hold on to unrealistic expectations in regard to the value of their homes - even in this ‘declining’ market - and how that affects the overall recovery of the market. I can’t disagree with most of their points about the ’stubbornness’ of some home sellers, and I’ve witnessed the ‘better-than-average’ effect more than a few times, but I think the blame belongs less on homeowners and more on the agents who routinely take overpriced listings. After all, if an unrealistic home seller is turned down by 2 or 3 agents in a row, and those agents are honest with that seller about why, won’t he/she eventually lower expectations and become more open to the reality of the market? Unfortunately, what happens many times is the reverse. An agent who just wants their sign in that yard (so he/she can get buyer leads) takes the overpriced listing, giving the homeowner validation that they know more than the agent. Wow, how does that help the client-agent relationship? And some agents wonder why their clients fight them on everything. Additionally, what does it do for the seller, when that sign is still in the yard 6 months later while home values continue to slide? Anyway, I digress…

Funny thing is, while I will always have those clients who want to over-price their homes, I’ve actually seen a reverse effect in Edmond lately. Let me explain; we have recently worked with some buyers who had unrealistic expectations

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Debe Maxwell, CRS
www.iCharlotteHomes.com | The Maxwell House Group | RE/MAX Executive | (704) 491-3310 - Charlotte, NC
Charlotte Homes for Sale - Charlotte Neighborhoods

Hi Ryan!  I see this all the time--I let sellers know at listing appointments that the market absorption rate is, say, 10 months--I'm competing with agents who tell them that their home will sell at THEIR inflated price in less than 6 months!  Smart sellers go with me, others don't--until 6 months later when their home did not sell and they're really hurting to sell!  Drives me NUTS too!

Debe in Charlotte

Nov 17, 2008 07:24 AM #1
Rainmaker
307,518
Ryan Hukill - Edmond
ShowMeOKC Real Estate Pros of KW Elite - Edmond, OK
Realtor, Team Lead

I can totally relate, Debe.  Drives me nuts that folks still fall for that stuff, but, like you said, they almost always see the light 6 months later.  Problem is when the market has slid even further in that six months, it gets to be an expensive lesson learned.

Nov 17, 2008 05:41 PM #2
Rainer
232,708
Tim Ludemann
Ochopee, FL

Great Blog...Selling Southwest Florida we are competing against Developers trying to get out of town by cutting prices and of course foreclosure that banks are dumping in auctions or MLS...Needless to say I have become really good at turning down listing in the hopes like you that enough agents educate the public we have a healthier market...The buyers listen to the news and they think there buying in Alaska and not Sunny Florida...there are no such things as 20k homes we are 20 min to the beach come on...But sure enough i get calls of people looking fo 3 bed room 2 bath pool home for 50K...not happening get real I tell them things are tuff down here but not that tuff...

Dec 03, 2008 10:24 AM #3
Rainmaker
798,159
Troy Erickson AZ Realtor (602) 295-6807
Good Company Real Estate www.ChandlerRealEstate.weebly.com - Chandler, AZ
Your Chandler, Ahwatukee, and East Valley Realtor

Ryan, the problem is that a regular resale home listing is having to compete with short sales, foreclosures, new homes, and now auctions.  When you have sellers in distressed situations, banks that are selling homes for less than their true value, new home builders trying to get rid of their huge inventory, and auctions cropping up everywhere, a regular resale listing seems way over priced.  Because all of these situations are distressed: homeowners unable to afford their mortgage payment and on the verge of filing for bankruptcy, banks losing money because of all the homes they have taken back and now have nobody making mortgage payments on them, and new home builders trying to save their business from filing bankruptcy due to their huge inventory, they are all lowering their prices to compete.  A regular resale home in which someone is just moving because of a job change doesn't have a chance of getting a good price for their home because they are competing with all the distressed sellers.  They have to lower their prices as well, just to get their home sold.  It's a vicious circle. 

Feb 10, 2009 05:25 AM #4
Rainmaker
307,518
Ryan Hukill - Edmond
ShowMeOKC Real Estate Pros of KW Elite - Edmond, OK
Realtor, Team Lead

Tim & Troy, thanks for your comments.  I agree, it's a vicious cycle that hurts everyone.  It's especially tough in those markets that have such high price-tags to begin with, because there's so far to fall.  Good luck to you guys!

Feb 10, 2009 12:04 PM #5
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Ryan Hukill - Edmond

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