Marketing Your Home
Overpricing Issues

   



If nothing is physically wrong with the property, most of the time the inability to sell is due to overpricing camouflaged by denial. A more accurate statement of the situation, for most would-be house sellers, is "We are unwilling to accept the price the market tells us our house is currently worth." These homeowners can sell. They simply won't sell. As long as you choose not to take the amount that buyers will pay for your house, it will continue to languish unsold on the market.

Correcting Overpricing
Many properties go through a needless series of ineffective price reductions before ultimately arriving at the correct asking price. If your house hasn't generated any offers, even though it shows wonderfully and is aggressively marketed, update your comparable market analysis and consider the following:

  • You or your listing agent may have given your house's amenities a much higher value than buyers do. It's tough to precisely establish the value of attributes such as proximity to bus lines, wonderful landscaping, and views.

  • You may have put too much emphasis on asking prices or used inaccurate sales data. Perhaps houses that were on the market when you prepared the CMA ultimately sold for much less than their asking price.

  • The local real estate market may have gone down the drain. Did mortgage interest rates skyrocket, or did consumer confidence plummet since the CMA was prepared? Find out how many properties similar to yours have sold since your house came on the market. Maybe nothing is selling.

  • You may have missed prime time. Every real estate market has peaks and valleys of sales activity.


Whatever the problem, don't compound it with excessive tenacity. If you haven't gotten any offers after approximately six weeks on the market, and other houses similar to yours are selling all around you, the odds are high that your asking price is at least 10 percent over your house's fair market value.


Taking necessary steps
Under these circumstances, correct the problem by cutting the price 10 percent. Here's how to maximize the impact of your price reduction:

  • Bite the bullet and make a full 10 percent cut. Making a series of smaller price reductions only prolongs the agony. Don't turn your house into "That old thing? Something must be terribly wrong with it. It has been on the market forever."

  • Use quantum pricing to fine-tune the new price. Suppose that your asking price is $169,500. A 10 percent reduction ($16,950) cuts the price to $152,550, which isn't a smart price. You lose exposure to all the buyers who instruct their agents not to show them anything over $150,000. A smarter price is $149,950.

  • If you still haven't gotten an offer after another six weeks or so of active marketing at the new price, make another 10 percent reduction. You may have been 20 percent or more over fair market value when you put your house on the market.


Six weeks isn't carved in stone. In a hot market, four weeks may be more than enough time to give your house maximum buyer exposure. In a slower market you may be wise to wait seven or eight weeks before a price cut. Let local market activity be your guide when you time price reductions



Signs of Overpricing
When you price property correctly, it sells. Conversely, even if your property is in exquisite condition and actively marketed, a lack of offers indicates that it's overpriced. The warning signs of overpricing may include any or all of the following:

  • No second showings: Well priced or not, agents and buyers rush to see new listings. Watch out for a precipitous decline in showings after the initial flurry of activity when your house first hits the market. If nobody returns for a second look, you've got a problem.

  • Many showings, but no offers: Switch hats -- suppose that you're a buyer. Your agent shows you a three-bedroom, two-bath house for $149,500. Then the agent takes you to a newer four-bedroom, three-bath home just two blocks away -- with the same asking price. The agent doesn't have to say anything; the difference between price and value is starkly obvious. The first house helps sell the second one.


Your listing agent should help other agents route house tours by pointing out overpriced properties the agents can show their buyers before bringing them to your well-priced house. Successful agents show buyers OPTs (overpriced turkeys) in order to sell well-priced houses.


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