Deborah Rutter.com-smart move!

Overheard by me from a seller:

“Well, we’re not going to GIVE it away…If we can’t get what we want, we’ll take it off the market.”

Their home went on the market in fall of 2009 and is now >33% below the original asking price. Everyone has their definition of a giveaway, I guess.

But the message here is that sellers NEVER determine the price of a commodity, whether it’s pork, orange juice, or houses...buyers do.  Whether the market is hot and buyers compete to out-bid one another, or the market is slow and buyers low-ball, wait forever and negotiate, buyers always decide what a home is worth.  That’s the nature of a commodity and a function of inventory levels.  If the above seller’s home was the only one in the county, they could probably get whatever they wanted…it’d be an all-out bidding war.

Every seller believes their home is unique, but buyers see them as interchangeable commodities, where lots of factors are a play and a final decision is an amalgamation of inputs. Your fancy granite counter tops mean little to a buyer who doesn’t cook, doesn’t care, or if you’ve priced your home as a result of a kitchen make-over that’s out-priced you from your neighbors.

But for every buyer, price is key.  Start too high, drop too fast, or drop the price too many times by too little, and you’ve lost the attention of that buyer until they’ve exhausted everything else on the market first.

There’s no excuse for poorly priced homes, but there are three main reasons:

1) Weak agents who can’t provide sellers with data and/or experience to show market trends, tendencies and patterns and provide solid fiscal advice.

2) Lazy agents who will take any listing at any price, and hope it sells after getting price cuts (if they even ask) rather than refuse the listing.

3) Sellers who refuse the advice of a knowledgeable agent in hopes that the, “let’s just try it for a few weeks,” approach will work.  It doesn’t.  You can’t fake, fudge or hope accurate, market-based pricing.

In 2008 and 2009 I told several sellers, both new and past clients NOT to sell. It didn’t make sense, and they didn’t have to.  Your home is likely worth less now that it was, but if you’ve been in it for awhile more now than you perhaps bought it for.  Your home in California would probably be worth more no matter what, and probably less in Iowa.  Pricing is location-based and market-based.  While you do have some influence, it’s a bit limited compared to other factors.

If you’re thinking about selling, getting on the market with the right price the day it goes on the market is essential.  It’s not rocket science, but guessing doesn’t work either, nor does a pile of tiny little price cuts.  You’ll always be behind the market curve.

A great agent prices to sell–any agent can price to sit.  Be choosy.

{ 0 comments }