No Room For Overpriced Homes in Changing Real Estate Market
Before the torrid real estate market of recent years, a common pricing strategy was to list homes at 2.5 to 5 percent more that the expected selling price.Â These way sellers would have room to negotiate with prospective buyer.
If you use this approach today, youâ€™ll be lucky to receive any offers.
Recently, listings priced at or under market value received offers-sometimes multiple offers-while overpriced listings sat on the maker unsold.
One risk of pricing too high is that buyers wonâ€™t make offers.Â Sellers often finding hard to believe-why not make a lower offer on a listing thought to be overpriced?
The answer is two-fold.Â First of all, in a market where well-priced listings are selling, an inflated asking price may indicate that the seller has unrealistic expectations.Â Making an offer involves a big emotional commitment and takes a lot of time.Â Most buyers wonâ€™t waste their energy when there are well-priced listings from which to choose.
Secondly, even if those buyers might prefer to buy without competition, the fact that a listing is popular is a stamp of approval.Â A property in high-demand is one that is likely to have good resale value.
Another risk of overpricing is that sellers can end up in a downward price spiral.Â Hereâ€™s how this can happen:Â You put your home on the market at a price youâ€™re sure is right.Â Your agent cautions against overpricing, but youâ€™re intent is getting what you believe your home is worth.Â After a month or two, you havenâ€™t received even a nibble from interested buyersâ€™ agents are using your overpriced listing to help them sell the well-priced ones.
The longer your home goes unsold, the bigger risk that it will develop a negative stigma.Â Buyers wonder if thereâ€™s something wrong with the property.Â So, you reluctantly agree to lower the price.
Your efforts could be fruitless if you reduce too little, too late.Â If the market softens, as it has in many areas around the country, you might have to make further price reductions.Â Buyers tend to gravitate to newer listings, not the ones that have been on the market for months.Â Youâ€™ll have to offer a cut-rate price to be competitive.
Itâ€™s difficult for sellers to be objective about the value of their homes.Â Although most sellers estimate high, some canâ€™t believe how much their homes have appreciated and underestimated the value.
For best results, rely on a real estate professional for a realistic assessment.Â The dynamic in many real estate markets is changing and sellers, in many cases are no loner in the driverâ€™s seat.Â Keep in mind when you select a listing price.
In closing:Â Comparable sales from a few months ago may be out of date for the current market.Â Even though your neighborâ€™s home sold for an exceptional price, it may have been the only game in town at the time.Â Now you are much more likely to encounter competition from other sellers.