These kind of stray away from blanket misconceptions and are more opinion… based, I feel, in observed circumstance… It is also a two-fer. One for sellers and one for buyers.
First, for the sellers…
There is a tendency among sellers to want to “price in a little negotiation room.” But there is a big problem with that… Buyers won’t look at a house they perceive as over-priced. So, that little bit of “padding” on the price will move your house out of the “gotta see” column, into the “maybe we’ll look if there isn’t anything else that we like” column… or even the dreaded “nope” zone.
I am going to be brutally honest here… at my peril… if you want to sell your home, you have to offer it up at a price that will pull buyers in to see it. And doing it right the first time is key. When your home goes on the market, it is fresh and gets the most hits on the listing and marketing. After it has been on the market a few weeks… or months… or years, it isn’t fresh anymore. At that point, lowering the price doesn’t have the same effect. There are fewer eyes looking at it.
Consequently, the price usually ends up going lower than the home could have sold for originally, had it been priced right to start with.
I know it is tough for sellers to take… especially now with values dropping in many areas. Most people just don’t want to think of selling for less than they might have sold for a couple of years ago, much less selling for less than they paid. But… it isn’t a couple of years ago.
Buyers… I haven’t forgotten you…
Sellers ARE cutting their prices to the bone. Offering low just the “test the seller” isn’t that great of a tactic. For the same reason that sellers starting high to work down isn’t good… it often doesn’t work out. In the case of many sellers, including institutional sellers, the initial low-ball offer often sets the stage. And what it sets the stage for is a seller that doesn’t think you are a serious buyer. And if the seller doesn’t think you are serious, they are unlikely to stretch as far.
Now, of course there is a limit… And the problem I see is that on properties that are GREATdeals, prospective buyers shoot out super low offers to see if the seller is desperate. And, more often than one would think in the current climate, they lose the chance to buy the property because there are other buyers.
One would think that in a serious buyer’s market, that all of the properties out there would be struggling… but that really isn’t the case. What I see from market trends is that only 25% of the properties that get listed end up sold… but the “Days on Market” for the ones that do sell is dropping. And the percentage of list for the quick selling properties is high… and in some cases over list.
In the case of over-priced properties… go ahead, shoot the ball low. There isn’t much to lose. But if it is a deal, don’t think it will automatically be a better deal. There are other buyers in the market. And for most, the last thing they want to do is lose out on a property with $100k in equity while trying to see if they can pull it off and have $125k… and end up looking at properties that they don’t like as much.
Doesn’t that seem at odds?
It would seem that telling sellers that they need to stop padding their prices and then telling buyers that sellers aren’t padding their prices would be talking out of both sides of my mouth… but (there is always a but!) it isn’t.
I am telling buyers that when they find a property that is a deal… jump on it and don’t let it get away. If it isn’t a deal… move on, because there ARE great deals.
And I am telling sellers that if you want to sell your house, make it a deal worth jumping on. Those are selling… fast. Buyers are largely kicking the over-priced properties to the curb.
from LilburnDwellings.com