Real Estate Sales 101

So last week I showed a home that my Buyer Client thought was overpriced. He thought it was overpriced because the first house I showed him on the same street, which was bigger, much newer, and in much better shape, but not as good a location, was priced $69,000 lower.

Checking the records I found that the Sellers have been living in the home for approximately 2.5 years and are now trying to sell the home for about 12% more than they paid for it. Since the Sellers did not leave during the showing (BIG MISTAKE!), we found out that they have not made any improvements to the property since they have been living there.

So they bought the house at the high-end of the market (and at the high-end of the $200K neighborhood), have put no money into the home, and now they want a 12% more than they paid on a house that has 2.5 years more wear-and-tear on it, during a “down market.”

Trying to be helpful, I gave the listing agent this feedback. She then thanked me and proceeded to tell my why I was wrong and that the house is price accurately.

Did I mention that the house has been on the market for NINE MONTHS with no changes to status and no price reductions? Real Estate Sales 101…if the house does not receive any offers within the first 30–60 days…LOWER THE PRICE. Duh!

Come to find out, the listing agent is also the agent that sold these Sellers this home. So I guess she doesn’t want to admit to them that they paid too much for it, and they are too ignorant to realize that if a house sits on the market for NINE MONTHS without an offer, it is priced too high.

Lesson learned: Beware hiring the same agent who sold you a home, to then resell the home. Make sure that the agent shows you all the sales figures for the past 6 months of homes comparable to yours in size, age, amenities, within the same neighborhood. And if you don’t receive an offer within 60 days, make sure you start lowering your price.

Tags: bad realtors, higher price longer to sell, home selling mistakes, over pricing a home, pricing a home to sell, selling your home, why house won't sell, why my home won't sell

Unrealistic Pricing On Homes Costs Sellers Big-Time

I have been working with a lot of Buyers this season and one thing that still amazes me is how often I see homes that have unrealistically high prices. In spite of what Gordon Gecko had to say about it in WallStreet…Greed will usually cost Sellers a lot when all is said and done. Let me give you a real-world example…

A few months back I showed a great home that had been on the market for close to a year. It had recently gone through a considerably price reduction and was now in my Client’s price range at $230,000, whereas originally it had been listed for $290,000. The house was great…in good shape, in good location, had nice landscaping, and so on. So the obvious question that comes to both my mind and my Client’s is: WHAT’S WRONG WITH IT?

Well here’s what was wrong with it…the house had originally been listed at $96/sf at a time when other homes in the same neighborhood where selling for $86/sf. Buyers and their REALTORs know the fair price for a home and will simply pass over one that is priced significantly higher than other homes of similar age, location, and condition. In most neighborhoods, Buyers have MANY of homes to choose from and they are looking for the best value…not the highest price.

Since the home was priced way over the market value, the home sat on the market for months…so now all the neighbors, REALTORs, and potential Buyers are asking themselves, “What’s wrong with it?” Meanwhile the owners have moved into their new home and now this home is sitting empty…while the owner is still paying the mortgage payments, insurance, taxes, lawn service, and utilities. Let’s say…$3000/mth.

So finally, my Client comes in and buys the home at $73/sf. When it was really worth $86/sf. Let’s review what greed did for this Seller.

Overpricing Home Costs the Seller A Lot

In other words, by pricing this home $32,000 over fair-market-value, the Seller lost $59,000!

One Final Thought: Even if this Seller had found a Buyer willing to pay $290K for this $258K home, the Buyer’s LENDER would not have loaned the Buyer that much money because the house would not have appraised for that amount! Sellers and Buyers need to understand that, unless the Buyer is paying cash for the home, LENDERs have as much to say about the final sales price as either of them.

So Sellers…think of pricing your home the same way you price a car…

Here’s a better example of how fair market value for a home is determined.

Tags: greedy sellers, higher price longer to sell, how to set home price, over pricing a home, pricing a home to sell, sellers greed, why house won't sell, why my home won't sell