Once upon a time . . . a long, long time ago . . . I went to college with a guy named John Leibowitz. He played on the soccer team at The College of William & Mary with a friend of mine. And they roomed together after college.
Anyway . . . that’s just a roundabout introduction to this hilarious clip from The Daily Show with Jon Stewart (aka John Leibowitz). Take a look at this clip and then keep reading below. (By the way – you probably already know, but Timothy Geithner is the Secretary of the United States Treasury.)
While this clip is pretty funny (at least WE think so!), it also reminded us of how some Home Sellers in Northern Virginia approach the market.
Did you think the auction scene in the clip was a little unrealistic? Well, we see that type of approach more often than you think. Sellers have in their mind a certain number they want to sell for – sometimes it’s what they “need”, sometimes it’s based on what they “think” their home is worth, sometimes its based on what they “owe”, sometimes its based on what they paid for it or what their neighbor’s home sold for last year. But it’s not based on TODAY’S market and what real buyers in the market are willing & able to pay.
So the Seller puts his home on the market – to “try” out the unrealistic price – even though their Realtor has counseled them against this strategy. “Let’s just try it for a month or so” is what the Seller might say. The home is shown, a number of buyers come through, but no one makes an offer. Thirty days go by quickly. Then sixty.
Time for a price reduction – right? Nope, the Seller wants to “wait for the right person to come through who appreciates what we’ve done with the house.” So they keep the price the same.
“1.6 Million! 1.6 Million! 1.6 Million! 1.6 Million! 1.6 Million! 1.6 Million! 1.6 Million! 1.6 Million! Please buy the house!”
See the connection?
So – no big deal, right? The Seller will eventually sell his home. But at what cost? Just a 60 day delay? Nope. Statistics show that the longer a home is on the market, the lower the price it eventually sells for. So it doesn’t just cost you time, it costs you money. You need to get it right the first time!
And then there was the whole “blue bathroom issue” in the video.
This is another area where Sellers make HUGE mistakes. Buyers in today’s market expect a home to be pristine and move-in ready. In their mind, that means moving into a home they can live in NOW – without doing any work. And just because blue tile might have been your choice, doesn’t mean it will be theirs – even if it cost you a bazillion dollars to install! But this is a topic for another day. Let’s get back to the whole issue of pricing.
Here some of the DANGERS OF OVERPRICING YOUR HOME:
(1) You will lose the excitement that a new listing generates: Real estate agents are working with buyers who have seen what is currently on the market and are waiting for something new to be listed. Therefore, the most activity will take place in the first 30 days of a listing. Your home will probably receive its highest and best offer during this time. After that initial period, the only people to look at your home will be new buyers in the marketplace.
(2) You will lose the most qualified prospects: Buyers won’t be able to even “make an offer” because they probably won’t see your property. They will view the properties that are priced within their purchase power range, knowing that they cannot afford anything above their range.
(3) Overpricing helps sell other, more competitively priced properties first: Your home may be used to demonstrate the good value of other properties. Your objective should be to enter the market in a position that will attract buyers to your home – not to other homes.
(4) Your home may become stale on the market: Prospects may wonder why it has been on the market so long or if something is wrong with the property, even after you lower the price. You may even have to settle for less than market value. A house takes on a reputation surprisingly fast, so don’t wear out your welcome on the market. Statistics also show that the longer a home is on the market, the lower the price it eventually sells for.
(5) You lose a strong negotiating position when your house is on the market for a long time, both financially and mentally: Prospects will not “rush” to make an offer on an overpriced property, and you may feel compelled to accept less when they finally do.
(6) If you do get an offer, the contract may fall through because of appraisal problems: The lender must justify the price to the secondary market and as our market has changed we have seen lenders become more conservative in this area.
This is one of the most important reasons to make sure you select the right Realtor. Don’t let an agent “buy your listing” by throwing out the highest suggested list price. While this may sound tempting, it can be very costly to you! A professional and experienced Realtor will provide an honest recommendation and will have your best interests at heart!
If you are thinking about selling your home, don’t be like Timothy Geithner! Contact The Belt Team at (703) 242-3975.
Northern Virginia Real Estate Blog 