Accurate pricing is the key to selling in 2009
December 9, 2008
Accurate pricing is the key to selling a home during this tumultuous market. Sellers are focused on selling for prices realized during the very peak of the housing boom and buyers are searching for bargains. Someone has to give. Both can’t achieve their objectives. A seller cannot sell their home for top dollar to a buyer who is after a bargain.
So who wins in this housing crisis?
Clearly, the winner is going to be the side with the cards stacked in their favor and it should be abundantly clear that the buyer calls the shots in this market. There are literally dozens of sellers for every buyer and educated buyers know this. Sellers that cannot grasp the reality of this are doomed to disappointment and eventual failure, which in many cases means foreclosure and financial ruin.
What does it take to sell in this market?
Sellers need to be priced competitively. If most comparable homes are priced lower than your price you’ve got a recipe for failure on your hands. And even if you’re priced similarly to most other homes you are probably never going to sell. Only those homes that are priced in the lower 25% of comparable listings are getting the showings and getting sold.
There are simply too many options for buyers. Why would they want to look at your home priced at $335,000 when there are similar homes priced at $250,000 – $265,000? If there are 12 – 20 listings for every buyer what do you think these buyers will do? They’re going to take advantage of their buying power and purchase the best deals. Those sellers clinging to 2005 prices will never even get a showing.
Sometimes the easiest way to understand how the market works is to close your eyes and pretend you are the other person. If you’re a seller pretend you’re the buyer. If you’re the buyer pretend you’re selling your home.
So if you want to understand why you’re not getting any showings try to put yourself in the buyers shoes. Now mentally change the industry. Pretend you are a buyer looking to purchase a Toyota Corolla. You head to the dealership and check out what the market has to offer. The lot is filled with Toyota Corolla’s. In fact you don’t recall there ever being so many cars on the market from which buyers may choose.
If you were a buyer walking around that Toyota dealership lot and you saw hundreds of similar Corolla’s priced around $17,000, but a few over to the side priced at $25,000 what would you do? Assume the cars priced at $25,000 are just a little nicer than the $17,000, such as they have sunroofs or CD players. Would you even attempt to negotiate the price of the $25,000 car down or would you instead negotiate the $17,000 car down and then later add your own CD player and sunroof?
Many sellers today wonder why they aren’t getting any showings. I hear, “But why don’t buyers at least make me an offer.” The answer is simple. Buyers think you’re completely irrational. Why would they waste their time with a seller that has such a high starting point when they can negotiate the lowest priced homes down even lower?