I really liked Glenn's anecdote about the purchase of his own home at a bargain. The neighbors (and presumably buyers) perception that there had to something wrong with the house.
As devils advocate I will challenge the stats a little bit. even though I ( intuitively ) agree with the premise that homes market priced from the outset command a higher final sale price than overpriced homes that go stale.
Challenges to the stats:
1) If (not that this EVER happens) but IF, the seller was right about the value and the Realtor was wrong then the seemingly overpriced listing would still sell within 30 days at high SP / LP percentage.
2.) It may not be staleness on the market, so much as physical deterioration that lowers the sp / lp ,
weeds grow, wet newspapers pile up, spiders webs multiply
3.) If it starts out over priced, Lets say $550K for a home that should be $500K, then sells stale 120 days later its sp / lp is 90.9% but if it was correctly priced at $500K to begin with, sold in less than 30, it is 100% sp / lp . However, except for holding costs by the seller and marketing costs of the Realtor, the actual sale dollars are the same.
The best way to provide evidence to back up the hypothesis (which I believe, intuitively to be true) that overpricing costs a seller money on the sales price as well as holding costs, would be to conduct an in depth case study of a large number of transactions. One would have to factor in variables such as showing availability, pricing search points, marketing expenditures and effectiveness, cleanliness and staging, listing agent attitude. -- Curb appeal, how do the pictures look on the internet, is the virtual tour effective or is blurry and fish eyed? Are the write-ups comparable? There are thousands of variables to a homes value, its perceived value, and its attractiveness.
To my sensibilities, one of the stalest things about stale listings are the pictures and comments that never change.. ( Listing going into 6th month with no price change: _ " Priced for quick sale !" )
Are you going to spend as much effort on the house that is 2% over priced as the one that is 2% under priced. And, Please, don't anyone post that they personally don't take on overpriced listings.. Someone does!
Which brings up the next chicken or the egg problem if sub-par or desperate agents are the ones that take overpriced listings to begin with, aren't they also likely to be sub-par agents even if the listing were perfectly priced? Since great agents have correctly priced listings and lesser agents don't. How does a statistical survey correct for that differential ?