There is a process in place that the vast majority of real estate professionals embrace when it comes to pricing homes that does not include a "wild guess" or "this one looks nice."
The system is essentially the same process an appraiser uses to establish a home's value. This "comparisson method" has its drawbacks but for the sake of establishing a guideline and being fair it does a good job.
Yes, there is a check and balance involved as well. If the public does not agree with the assigned value........they walk away and find one they agree with.
The difficulty here is that the real estate market is going through a serious downward adjustment that is by all standards, difficult to keep up with. This is complicated by owners that are faced with selling their home for less than they paid for it...try walking in their shoes for a while. You'll come to understand this decision hurts.
What are realtors thinking?
The reality is we are thinking about a lot.......seemingly, more then people give us credit for.
As far as under-pricing a home, this is a technique that I use t generate multiple offers and get the home into contract faster....great for distressed homes. I don't think it's possible to "underprice" a home if it's properly marketed. However underpricing without a solid marketing strategy hurts the seller, the neighborhood, and the industry.
As for the inflation of home prices as compared to 20 years ago, I think you can look at any product from food prices, to automobiles, to clothing and see the same trend. The purchasing power of a dollar 20 years ago is not the same today.
Yvonne Baker, Real Estate Consultant
Some homeowners who bought at the top of the market, who now find they owe more than the property is worth, may find they must sell for whatever reason (often financial hardship).
There was a reversed trend in the 2004-2005 market when values were increasing at a phenomenal rate.
Yvonne Baker, Real Estate Consultant
I wish that buyers that feel like you do, would offer what they truly feel a home is worth. That would sure help us relay to our sellers that the market feels the same way. I am good with negotiations and I think a lot of buyers would be surprised what they can get a home for, if they just offered a realistic price and played ball with the seller.
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This question is quite old, but still relevant.
We're in a price driven market now. Pricing is critical. My counsel is to price realistically for this market. That means comparison to other properties. The Denver area market, like other western states, has been hit by plenty of foreclosures and this has influenced prices. Still, there are many parts of the metro area - especially the city of Boulder - that have resisted national trends.
Buyers should concern themselves first with obtaining financing and then shopping for homes in their budget. If you're looking to get into a home you can easily afford and you don't mind if there are some things that need to be fixed, then a lender-owned home may be right for you. Remember though, a foreclosed home typically has not been maintained for a while. Foreclosed homes are auctioned "as is."
We're empowered to do the best we can for every client. We can give counsel on prices, but it is the seller who has the last word. If the price can't meet their needs, the property does sit. Some sellers become discouraged and pull their homes off the market. The job as a seller representative is to make sure a home doesn't remain on the market for long.
Everyone has this in common: Buyer and seller alike want a stable market. Real estate professionals want to see the market recover, too.
I have worked in real estate in good markets and not-so-good markets. This is a tough, tough market for sellers. There currently are two factors that can favor the seller's outlook. There have been job gains while mortgage rates have come back down. In some areas, buyers have to compete for homes. That may be a function of reduced inventory. So, homes that remain on the market for a little longer might benefit from more bids.
Three years removed from 2008, the market generally has been soft. Nationwide, values have returned to levels not seen since 2000. It's as if this past decade didn't happen. If only that were true ... no 9/11, not real estate bubble, no wars.
PML of Longmont, CO
720 810 0683
I love your questions here as I see this happen from time to time in my area as well. I don't think you can group all of us "real estate professionals" in one bucket as there is a very small percentage of agents who are in this business 100% and working full time to sustain our career and community out reach.
In my experience working with sellers, I always warn them of the negative outcome of pricing a home too high however I always get those sellers that want to do it anyways. This is situation where an agent can take the listing as an overpriced listing and do the three P's of real estate - - put a sign in the yard, put it in MLS and PRAY!!
A good agent will counsel their sellers on the experience of having an overpriced listing and hopefully will get the seller to come to a point of compromise on price or will not take the listing due to ethical reasons of not being able to truly serve the client in selling their home at a price that is above market value.
I hope this helps as far as the mindset of a good agent!!! Sadly, it seems that those folks that are trying to sell at a price that is $15-30k above the market may actually turn to a distressed property.
Our nations homeowners are definitely facing some tough times right now and it is more important than ever before (and ALWAYS has been important to me) to counsel them on their very best option for their home and execute this plan in full. Whether it means selling the home and sitting tight for a couple more years while we await recover - we will get it done.
Your Castle Real Estate
(720) 988 5952
LOL Realtors aren't blind to it. Unfortunately you have some Realtors who will take an overpriced listing and as you say, it sits and sits. After it expires, some sellers get real and price it right, some find another realtor who will take the overpriced listing, and some will go FSBO. Realtors need to WALK AWAY from overpriced homes, but some don't--they think they will be able to get a price reduction in the future, or they think they will sell other homes off the calls they get. Unfortunately for them, buyers aren't stupid and can spot an overpriced listing when they see it and they don't call. I have stopped even showing overpriced listings, because I've found that even with supporting comps, sellers will not negotiate. They're waiting for the price "to come back up" to where it never was to begin with.
The reason that home prices have gotten so high is due to two things. The tech bubble bursting, and 9-11. These two things had very negative effects on consumer confidence and spending, and the government therefore lowered interest rates to very low levels to jump start things again. The rest is history, which I'm sure you've been following for the past few years since late 2001.
The reason that the dollar is devalued is not from artificial inflation of prices. The dollar is devalued because the government has been printing more money. The reason they are doing this is because they need more money to fund the Iraqi War, provide bailouts and loans for troubled banks, try and help out Freddie and Fannie, give everyone a stimulus check, bailout people facing foreclosure...the list goes on and on. They don't just have cold hard cash sitting around in a vault, but they do have access to printing presses to MAKE cash. The more of an item in a marketplace, the less rare it is, and thus it's value goes down. That is why prices on consumer goods have gone up (actually the haven't gone up, it's just that it takes more devalued dollars to buy the same tube of toothpaste now).
It's finally time for the government to stop stepping in and trying to stop the fallout from the mess it has made. We'll see how things pan out in the next couple of years.
Yvonne Baker, Real Estate Consultant
sometimes the price of a home is what the home owner insist on listing it. As a real estate professional, we're supposed to advice you what the market deems your property is worth, however, despite that, some owners put a sentimental value to the home and feel that although the market is down state wide, they still feel that there home is still well above the norm. This results in a house sitting on the market for a long time, getting stale. We offer the advice as we are supposed to buy if the home seller has a different opinion of the house value we have 2 options, list it for what they want it listed for and let reality hit them, and their pockets in the long run, turn down the listing and move on. A lot of Realtors won't do the second option so they end up with a house sitting, and sitting, and sitting. Hope this answers your question somewhat.
Also, may I point out, there are plenty of homes in foreclosure in the area. Getting a listing for those homes is not so easy to get.