Consider, though: Take a neighborhood with 4 similar houses for sale. One is in foreclosure. They're priced at $400,000, $410,000, $412,500, $417,000....and $330,000 (the one in foreclosure). Which one do you think is going to get the most traffic? And I can hear buyers saying, "Well, yes, the one at $400,000 is nicer. But not $70,000 nicer. Now, if that $400,000 house could come down to $360,000, I'd probably go with the nicer house. Mr./Ms. Realtor: Do you think they'll consider an offer at $360,000?"
When you're looking at absoprtion rate, you really are hoping (in this case) that the absorption outruns the foreclosures. I know of certain neighborhoods in which the only houses for sale--and there are a lot of them--are foreclosures. One condo complex where 3 bedrooms/2 baths had sold for up to $300,000 are now selling for $200,000 or less today. The people not in financial trouble can't afford to put their condos on the market; why bother listing one at $260,000 when there are dozens below $200,000?
Hope that helps.
With the media hype about the sluggish real estate market, buyers are being very critical of pricing and stagging. It is highly recommended that you stage your home as though it were a builder's model and that your price takes your current competition into account, not just sold comparables.
It may be a good idea to have your agent run an absorption rate analysis for you to see exactly how you fit in the market. The aborption rate analysis will show you exactly how many homes in your price range are selling per month. If three a month are selling, you know that your home but be in the top 3 that month. Sounds simple enough, right? Where it becomes difficult is when you have 20, 30 or more homes on the market within your price range. Many times, your home is more likely to sell if you were to lower the price. You may be able to better compete with a lower price range...and lower price ranges usually sees a higher rate of sales.
Even in our market where 20% of our sales are foreclosures, many of the homes that are in showcase condition and competively priced, still see multiple offers. If you are in a "buyer's market" like most of the country, it is not time to test the market with price. It is time to price it right and get it sold!
The Realtors will consider the foreclosure, but not