When the market began its shift a few years ago to a strong seller’s market, buyers often were unrealistic when making offers on houses. They would find that other buyers – ones who had already overcome being unrealistic – were the ones who were successful in having their offers accepted. It sometimes took as many as three offers before buyers were willing to write truly competitive offers – and still many were unsuccessful in their bids.
Now, as interest rates rise, affordability is declining. And, as the market slows, we see houses staying on the market longer, fewer buyers and unrealistic sellers. Unfortunately, when the market shifts, sellers don’t get that visceral feedback of having offers rejected. Instead, the house languishes on the market and the lack of offers is the only feedback.
I showed a house this weekend that started off priced too high. Perhaps the sellers wanted to “test the market” or they needed a certain amount of money out of the sale to move on to the next house. Or the price seemed reasonable at the time. Whatever the reason, this very nice house has been on the market for months. The price has come down once. And still it sits. At this point, many buyers are wary that there might be something wrong with the house. And frankly it has become such a fixture on the house-for-sale landscape, that many buyers and agents no longer even register its existence.
While “priced too high” is sort of subjective, the seller and the agent had to have known in fairly short order that something wasn’t working. Something had to change – make showings easier, change the condition of the property, or – gasp! – reduce the price.
There is a very general rule of thumb regarding pricing – one that works especially well in neighborhoods where there are lots of similar houses. And note – this scenario assumes that the property is in the MLS, has a lockbox on the door and has a sign in the front yard. In other words, that the house is getting the normal exposure that a house-for-sale should get.
- If you get no showings, the price is way too high.
- If you get showings, but no offers, it’s still priced somewhat too high.
- If you get showings and offers within the first week or two, you’re right on the money.
Most houses sell within 5% of other similar properties that have sold recently.
If you’re priced above that, prepare yourself. You could be on the market for a long time.
© 2006 Susan Pruden.