By Dian Hymer
Nationally, the median sale price of homes has risen for each of the past seven years. To take a profit, this should be a great time to sell. But not all sellers are meeting with equal success in this market.
In any market, proper pricing is key to a successful sale. Even in today's healthy housing market, the proper pricing principle applies. Eager sellers sometimes lose sight of the fact that buyers aren't lining up to buy at just any price. For a listing to sell it must be priced in line with what the current market will bear.
It's difficult to pin point market price-the price a willing and able buyer will pay- when the market is moving up or down quickly. In a fast-paced market where multiple offers are common, and where listings are selling for more than the list price, extra care should be taken in analyzing comparable sales.
The temptation is to become overly aggressive with your list price. You hear that your neighbor's home sold for far more than anyone expected. So, you figure that if your neighbor's house sold high, you can list high and experience the same success.
A familiar scenario goes like this. Your neighbor listed his house last month for $649,000. He received six offers and the listing sold for $810,000. Since your house is roughly equivalent to your neighbor's, you decide to list for $810,000, which you figure is the new market price for your home. Rather than six offers, you receive none.
Try to find out the details of comparable sales that sold for significantly over the asking price. Was the winning bid quite a bit higher than the offers? Is so, the listing would have sold for a lot less were it not for the one sky-high offer.
It would be more realistic to gauge the value of your home by the price that the other buyers were willing to pay. If you price your home accordingly, and buyers think your home is worth more, then they'll bid the price up. However, if you price your home according to your neighbor's sky-high sale price, you may be stuck at a price that is too high for the market.
Recently, three sellers of homes in Piedmont listed their homes for prices that the market couldn't support. They each over-shot the market by $100,000. As soon as the list prices were lowered by $100,000, the listings sold.
Home Seller Tip: If you do over-shoot the market, lower your price quickly while the listing is still fresh in the minds of agents and their buyers. The longer you wait to lower the price of an over-priced listing, the harder it will be to rekindle enthusiasm for the property.
In an active market, where listings are selling quickly, often with multiple offers, it's easy to tell if you're priced too high. If you've had market exposure-Multiple Listing, open houses, advertising and good showings activity, but no offers, you're probably over-priced.
Some sellers resist making a price reduction, hoping that someone will come along and pay the price. Don't fall prey to wishful thinking. Buyers won't pay your price simply because it's the price you want or need. Buyers must perceive the value in order to pay the price.
The Closing: A timely price reduction might surprise you-pleasantly. A Montclair home seller recently listed too high for the market at $749,000. Within six days, the price was reduced to $699,000. The seller received two offers and the listing sold for $721,000.
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