Here in our market (Somerset County, New Jersey) we are finding the homes are generally selling for 1-5% of their list price - when that asking price is at the home's "strike price" - be it right out of the gate or after 3-4 price reductions. Case in point, I just listed a great house in Bridgewater, NJ - the sellers followed by recommendation on pricing and within a week we had an offer very close to list - list price about $690K and we are under contract at $685K!
You can learn more about my approach to selling homes by visiting my website http://www.feenick.com and clicking on "The Feenick Advantage".
Price it wisely and maximize your exposure to potential buyers and you should be in good shape.
Search and connect at http://www.feenick.com
You list a house that should sell for around $500,000 for $650,000. As Keith notes, buyers shop in price ranges. So the people looking at houses in the, say, $625,000-$675,000 price range see yours. And they compare yours to the others in that price range. Your property clearly isn't as good of a value. Their agents tell them that your house appears to be overpriced. For what you're asking, someone can buy substantially more house. They pass yours by.
People looking for houses in the $500,000 range might be looking at houses from $475,000-$525,000. They won't even know that yours exists. And if, somehow, they do notice yours, they'll see that it's priced $150,000 above what they can afford...and $150,000 more than comparable houses are selling for.
You ask about marketing your home as a "motivated seller." In today's market, if I saw a house worth $500,000 listed at $650,000 by a "motivated seller" that would tell me just one thing: That the seller bought at the top of the bubble two years ago and got 100% financing, probably with an ARM. They're motivated because the ARM is adjusting and they can't afford the house. And the house is overpriced because they can't afford to cut the price to less than they owe. I don't know what the market's like where you are, but I see that here (Northern Virginia) a lot. Buyers don't even touch those properties. They wait until they're offered as a short sale. Or, better yet, as REOs.
OK, so you drop your price from $650,000 to $600,000. That's not a huge price drop. Moderate, but not huge. And it's still be $100,000 overpriced. It would still be out of the range that people looking to buy a $500,000 house would be considering. And my additional reaction would be: "Well they must think that that price cut makes them competitive. So now if I make an offer substantially lower they'll scream and yell that they've already cut their price by $50,000."
You wouldn't even be able to attract real estate investors. (Sometimes called "bottom feeders" here, though I strongly disagree with the description.) The way they operate is: They determine ARV (after repair value of the property). They then reduce that number, using a multiplier of 0.65 to 0.7. Then they subtract any needed repairs. So a real estate investor would instantly go to the real value of $500,000, drop that down to about $325,000, then subtract any needed repairs. All houses need something. So your offer from investors would be in the range of $300,000.
Having said all that, I do agree with you that some buyers seem more concerned with "getting a deal" than "getting a value." You see those questions here on Trulia all the time. But that's still a minority of the buyers (I hope!).
So: Price it competitively, at the lower end of the comps. Make sure it looks good. Make sure your agent markets it aggressively. That's your best formula for selling your home quickly for the most money.
Hope that helps.
Search and connect at http://www.feenick.com
You certainly have a lot of concerns. I looked at your profile and just want to say that I hope the information you are gathering is helpful.
Here is some feedback on your plan:
The buyer that first sees the home they purchase sees it with a Realtor 90% of the time (based on a 2007 CAR Survey). Why do buyers chose to work with Realtors? Because we work for "free" from the buyer's perspective. Why is that important to you? Because that means that for the most buyers they trust their Realtors to do the looking for them.
How many homes have you bought? Right now I have five buyers under contract. Each one is a separate case: budget, timing, wants and needs. I don't spend my time looking for listings that do not fit my buyer's criteria, Sure, I track the listings, but frankly I don't have time to absorb everything. Each one of my buyers has a price range, so I have shopping carts set up in the MLS for their profiles, when a property comes along, if it fits the profile, I get an email. Then I check it out, if it makes sense, then I review it in detail.
So there are a couple of lessons here:
1. Buyers usually use a Realtor, so you need to get Realtors' attention.Realtors know price, so overpricing will simply prevent Realtors and their buyers from being aware of your listing.
2. Buyers also shop in price ranges. I know home values, so when we agree on a price range, say a three bedroom, two bath, 1300 s/fm I won't look at anything over $625K. Taking your plan, you don't need to worry about buyers lowballing because if I had a buyer that wanted to bid $100K low I would discourage him. I sat down last week with a seller and his REaltor for a property over $100K., and he said to me "I don't need to sell" I felt sorry for his Realtor.
3. The good deals always go first. In my MLS, properties that sell in under 30 days sell closest to asking price. The rule of thumb is that you need to list it at the sales price. As a home sits on the market, it loses value. In our market we are seeing an average decline of 1.4% per month in sales price per square foot. As for your market, find out what you market it doing.
4. Are you selling without professional representation? I urge you to at least interview three REaltors and ask for an estimate of seller's net proceeds. Then you do the math. I think you'll be surpised ,