When to drop the list price? It is harder than hard to figure out the list price in the present real estate market. There are low sales prices for foreclosures and high sales prices from homes that have been totally renovated and are move in ready. Sellers do not want to leave any equity on the table when they sell their home so they are generally rather conservative when they pick a list price for their home.
In general, sellers look for the highest list price in their neighborhood and then assume their home will sell for more than that. It is often emotional attachment rather than cold hard business sense that blinds them to the facts of the situation.
Often sellers assume money they have spent improving or maintaining their home will automatically increase the sales price of their home. “No way Jose.” “Aint going to happen.” The BUYER has to see value in any improvements that have been made and the BUYER determines the value of improvements in the marketplace.
Lets assume you chose a list price and your home hits the market with the grass cut, carpets replaced and some great print and Internet marketing from an agent like Sally English and The English Team. All eyes are on the new kid on the block. Email alerts are filling the Inboxes of agents and buyers who have set up filters in the local MLS to send new listing meeting a certain criteria their way.
Lots of potential buyers are looking at your home on Internet sites. Agents are calling their clients who have been looking for a 4 bedroom traditional with a bedroom on the main floor in Hawthorne Elementary School District.
But only a couple of people come to take a look at your home. You have only 3 showings by real estate agents in the first three weeks of the listing. You suddenly become aware that you misjudged the market place. Your home is priced too high.
What happened? While you were sitting around waiting for the phone to ring agents were showing competing homes and writing contracts for purchase. The real estate market made a judgement about your home: “It is a nice house but it is priced to high.” “The competing home offers more value and we wil go look at that home and perhaps make an offer.”
You, the seller might ask: “But why didn’t you come look at my home and then make a lower offer.” Folks, its not working that way in today’s real estate market. You only have a limited amount of time to get a BUYERS attention. You have got to make your best shot, put your best bait on the hook, show the BUYERS your best cards……..up front……..while you have their attention. If you are overpriced my advice is to drop the list price BEFORE YOU LIST.
SOLUTION: Adjust the price and the faster you can do it the better. Reduce the list price, lower the list price or advertise it as a new price. It doesn’t matter what you call it. You have to get a BUYER’S attention.
NOT A SOLUTION: Just wait until a buyer comes along who will appreciate what we have and then make us a lower offer, oh and it might be lower than we want but we will negotiate with them And if not, we can just rent the home. My answer: go ahead and rent it now. You will save 6 months of holding costs expenses including electric, gas and water utilities plus the tax you are paying DeKalb County plus any insurance and mortgage costs you have. We have a great rental group in our office and I am happy to refer you so you can at least have some income during the 6 months we would have been sitting around on the market place doing nothing.
SOLUTION: Ask you real estate agent for a revised market analysis. See how the market moved while you were waiting around at a higher price than potential BUYERS were even willing to consider. The change your price to reflect the market’s evaluation of your home.
SOLUTION FOR VACANT HOUSES: hire a staging company to come in and make your home look lived in by a demographically appropriate family. OR use a home management company to put in a non-paying tenant with great furniture.
NOT A SOLUTION: Do nothing and hope things improve.
SOLUTION: Look at feed back real estate agents have given from their showing. Granted, it is getting harder and harder to get feed back from Realtor showings. But assuming you have some feed back, what did other real estate agents and potential BUYERS say about the price and condition of the home.
SOLUTION: The sooner you drop the list price of your home to a realistic range, the sooner you will receive lookers and offers to buy your home. Maximum wait time to make this decision: 4 weeks.