WHY REAL ESTATE PRICE PADDING DOESN’T WORK IN TODAY’S MARKET?
Many sellers are in denial about the current value of their home, particularly if they bought within the past ten to twelve years. The market peaked in the summer of 2006, and home prices dropped significantly in most areas from 2007 through 2012. The market finally is on a slight upswing
Sellers often see no harm in asking a higher price — based on their needs or desires rather than what the market will bear. “We can always come down” is what some sellers say……Letting your home sit on the market at a price that’s too high can result in price reductions and a lower sale price.
Today’s homebuyers are nervous, pragmatic and well educated about the market. Not only are buyers cost-conscious, fewer buyers can qualify for a mortgage due to recent credit tightening. Many who bought in height of the market couldn’t qualify for the same mortgage today. There is a smaller pool of motivated, financially qualified buyers than there was several years ago. These buyers have an edge in most markets.
Buyers want to know how long a listing has been on the market. If it has been on the market for some time, they wonder why it hasn’t sold. Is there something wrong with it? A high price can signal that the seller isn’t motivated. Buyers don’t want to waste their time. Don’t waste yours as a seller if you aren’t serious about selling at current market price.
No one knows for sure when the housing market will turn around and it’s difficult for homes to rise in value once interest rates start to rise. Another factor is the condition of the job market and the economy.
There isn’t an urgency to buy before prices rise; buyers are taking their time to find the right long-term home. They are not overpaying. Even in low-inventory markets where multiple offers can occur, the price is usually not bid up radically, unless the listing was considerably under priced.
The combination of lower home prices and interest rates has made housing more affordable than it has been in years.
To take advantage of this window of opportunity to sell, your home needs to be priced competitively. There was a time when sellers padded their list price so that they’d have room to negotiate. That strategy doesn’t usually work in this market. Your house needs to look great and be priced competitively so that buyers realize they have to jump before someone else does.
The market is constantly changing. If you find after your home is on the market that it’s not receiving the interest you’d anticipated, ask your agent for feedback from agents who showed the property. Find out if similar listings in the area have sold recently. Did buyers who looked at your home buy other listings instead? The market will tell you quickly if your home is priced too high.
BOTTOM LINE: The seller has window of opportunity to price it right…. Lower your price as soon as you discover it’s too high so that you don’t lose marketing momentum.
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