Overpriced Homes-Sell Slower and For Less

By
Real Estate Agent with Munson Realty Southern California Real Estate

Overpriced Homes-Sell Slower and For Less If there’s anything we can take away from the plethora of Bank Owned Foreclosures is they certainly know how to price a home to move!

I maintain that you almost always shoot yourself in the foot by overpricing your home. Your home will almost overpriced homesalways sale at or above market value by pricing at or below market value.

So why is that? Well think back at when YOU were buying a home. Remember when a “great deal” came on the market and everybody and their agents were “swarming” to the open house? You placed your offer only to find out their were 10 other offers and they were going above the asking price? This “bargain price” created an auction affect and got people excited. THAT is how banks are pricing their homes and if you want your home to move quickly and for the most amount of money, this is a winning strategy.

So why don’t sellers do it? I think it’s because there’s a little voice inside of our head (and pocketbook) that says “what if”.

“What if”- I can get $50K over market value. (even if someone were excited enough about your home to pay $50K over appraised value, their lender won’t loan the money if the value isn’t there. No loan, no buyer)

“What if”- I don’t get multiple offers and I only get one offer (May be still overpriced!)

Often fear (and greed) hold us back from making smart choices! Don’t feel bad though, even Real Estate Agents are guilty of senselessly overpricing their homes. Somehow when it’s our turn to sell all of our “market knowledge” becomes goo and leaks out of our ears! It’s like the hairdresser with bad hair!

The bottom line is, almost always, an Over Priced House will sit on the market longer and sell for less than it should have had it been priced strategically from the beginning.

 

Copyright © 2010 By Stephen Munson,Munson RealtyPasadena|Overpriced Homes-Sell Slower and For Less*overpriced homes,overpriced house

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Re-Blogged 55 times:

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Location:
California Los Angeles County Pasadena
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overpriced homes

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Show All Comments
Rainer
43,085
Valerie Duncan Stewart
(Metro First Realty) - Oklahoma City, OK
Real Estate Agent-Broker, OKC, OK

Stephen,

Great post and so true. Pricing right is key to a successful close and happy sellers and buyers!

Aug 09, 2010 01:10 PM #136
Rainer
192,707
Debbe Perry
Real Living Carolina Property - Morganton, NC
828.439.3084 Morganton/Lake James NC

Well priced and in great condition - this is what's selling in this market. My first BIC (and mentor) said, "Sometimes it's  best to be the second listing agent... ." So true.

Am getting ready to re-blog right now!

Aug 09, 2010 01:47 PM #137
Ambassador
2,398,007
Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

HA!  I don't know what the record is or average, but this post has a very large number of re-bloggs.

Aug 09, 2010 01:56 PM #138
Rainmaker
99,317
Marsha Cash
RE/MAX Advantage - Stockbridge, GA

I haven't used that reasoning with a seller, but have thought about it (pricing lower to get multiple offers).  Starting high and coming down sure doesn't work!

Aug 09, 2010 03:24 PM #139
Anonymous
Anonymous
Connie Hinsdale

I tell my agents to walk away from overpriced listings unless there is an assurance (i.e. pre dated price reductions completed at time of listing) that the seller is motivated to get their home sold. Better to let the competition list it --spend thier $$ on advertising--deal with the frustrated seller (and we all know it is the agent who gets the complaints from the seller regarding why the property is not selling) and having the competitions' sign up that shows what they can't do, SELL THE HOUSE. Then when the listing expires, and the seller is willing to discuss the REAL price based upon the market, then list it. We need to decrease our inventory not grow it with unsaleable listings.

Aug 09, 2010 07:27 PM #140
Rainer
24,389
Jamie Friedman
Prudential All Star Realty - Kapaa, HI
Kauai Real Estate Connection

Great Blog! I hate to be redundant but SO TRUE!

Aug 09, 2010 09:54 PM #141
Anonymous
Anonymous
Liz Jones

You are correct basic economics of supply and demand, high inventory low price, even if the inventory drops I don't see banks leading the money like they did.

Aug 09, 2010 10:14 PM #142
Rainmaker
99,621
Mary Campbell
Abrams Coastal Properties - Newport Beach, CA

Great post, I totally agree. I just wrote something similar my self a few days ago!

Aug 09, 2010 10:46 PM #143
Rainmaker
342,003
Don Wixom
RE/MAX Advantage Nampa, ID - Nampa, ID
"Looking out for your next move..."tm

Stephen, you are right on!  Price is everything in this market! The home must shine & be price AHEAD of the market... Great post!

Aug 10, 2010 09:49 AM #144
Rainmaker
339,438
John DL Arendsen
ON THE LEVEL General Contractor, Crest Homes Factory Built Housing Dealer & Developer & TAG Real Estate Sales & Inves... - Leucadia, CA
Contractor, RE Brk, Factory Built Home Dealer/Devl

Bottom line is the Affordability Index. As long as you're living in an area where only one out of four employed people can afford to buy a home they are over priced for that average Joe. In my area it's going to be a long time before homes will be affordable if ever. Geographic and climatic desireability drives prices up. Wealthy folks like to live in nice areas and will pay the price driving the affordability index even further off the charts for the average wage earner. It's a vicious circle in this area. I don't see prices going down inasmuch as they have actually gone up in the San Diego area this year whence many other areas of the USA are still in somewhat of a tailspin. Hope that makes some sense.

Aug 10, 2010 11:44 AM #145
Anonymous
Anonymous
Amy Bly

Amen! I see that going on in my area in Northern NJ all the time; everyone seems to price $25-50,000 over what the house eventually sells for because they bought high and are losing money on the sale to begin with. But "wishing won't make it so." I agree it's much better to price at a very reasonable level and drum up the excitement and visitors that way. I never understand why sellers are willing to deal with months of keeping their homes ultra-clean (hopefully!) and the inconvenience and uncertainty of multiple showings and few or no offers because their homes are priced too high . . . as a stager, I don't get involved with pricing, of course, but it can be hard to stage homes that are considerably over-priced. I always tell owners their agent knows the market and that it IS a very slow market in our area.

Aug 10, 2010 10:48 PM #146
Anonymous
Anonymous
Amy Bly

Amen! I see that going on in my area in Northern NJ all the time; everyone seems to price $25-50,000 over what the house eventually sells for because they bought high and are losing money on the sale to begin with. But "wishing won't make it so." I agree it's much better to price at a very reasonable level and drum up the excitement and visitors that way. I never understand why sellers are willing to deal with months of keeping their homes ultra-clean (hopefully!) and the inconvenience and uncertainty of multiple showings and few or no offers because their homes are priced too high . . . as a stager, I don't get involved with pricing, of course, but it can be hard to stage homes that are considerably over-priced. I always tell owners their agent knows the market and that it IS a very slow market in our area.

Aug 10, 2010 10:48 PM #147
Rainmaker
229,553
Doug Dawes
Coldwell Banker Residential Brokerage - Georgetown, MA
Your Personal Realtor

Great post. My wish is that real estate agents would just refuse to take overpriced listings. This much easier said than done as we work through this current market. Real Estate professionals do not make the market... they sell the market.

Aug 11, 2010 10:27 AM #148
Rainer
140,501
Pasadena Short Sale Agents Pasadena Short Sales
Munson Realty Southern California Real Estate - Pasadena, CA

Thanks everyone for all the responses! Unfortunately I've been sick and have only had energy to deal with my wonderful clients.! I appreciate that most of us are on the same page with pricing!

Thanks, Thanks and Triple Thanks!

 

Pasadena Homes For Sale

Aug 11, 2010 11:21 AM #149
Rainer
24,026
Anne Vigneri
CASA VERO Staging & Redesign - Albuquerque, CA
Serving the Mariposa California

I experienced this personally when we sold our home a few years ago. Our Realtor suggested a price that we thought was scary low.  We KNEW that she was a hard working, successful agent.. BUT... REALLY ???.. THAT LOW???  .. We were reluctant of course, but we agreed... The house went on the market at $459,000 and sold nine days later ( with nine offers) for $750,000

I BELIEVE in this strategy,,, But at the same time, if you only get one good offer and it's for the asking price,, you need to be prepared for that too!.. Especially in this market..

Aug 11, 2010 12:16 PM #150
Rainer
140,501
Pasadena Short Sale Agents Pasadena Short Sales
Munson Realty Southern California Real Estate - Pasadena, CA

Hi Anne, Thanks for the "Sellers Viewpoint"! Glad you raised your hand! :)

Aug 11, 2010 04:02 PM #151
Rainer
9,174
Crystal D'Angelo
Keller Williams Frisco Stars - Plano, TX

This is so true.  It is such a challenge to get homeowners to understand this strategy.  If I have clients who want the "what if"  strategy I will take them to preview a few other homes in the neighborhood so we can compare and price BELOW our competition.  Thanks for the great article!

Aug 12, 2010 11:15 AM #153
Rainmaker
376,307
Kerry Lucasse
eXp Realty - Nest Atlanta Team - Atlanta, GA
Your Nest Atlanta Real Estate Consultant

Excellent post!  Here in Atlanta, homes that are priced correctly sell in 26 days (on average) and those that overprice end up taking almost 300 days to sell.... if they ever do sell.

Aug 14, 2010 12:53 AM #154
Rainmaker
44,490
Carol West
Carol West Real Estate, LLC - Hillsboro, OR
Real Estate Agent, Hillsboro, Beaverton, Portland

Thanks for a great post and very good information to share with our clients.

Aug 14, 2010 01:06 AM #155
Rainmaker
130,203
Lanette Branch
RE/MAX Components - Fallston, MD
Bel Air, MD REALTOR

Stephen are right on with this one.  Love, love, love the 'shoot yourself in the foot' analogy; it really gets your point across.

Aug 29, 2010 12:47 PM #156
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Rainer
140,501

Pasadena Short Sale Agents Pasadena Short Sales

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