WeÃ¢â‚¬â„¢ve been seeing a lot of sellers coming on the market overpriced, ignoring comparable sales and the professional consultation of the experts they are hiring.
The Dangers of Overpricing: In order to compete, over 10% of the active inventory reduces their asking price each week. Please ignore reports about the rise in the median sales price!!! Ugh!!! These reports are just confusing sellers and luring them into thinking that values are unstoppable and are galloping upward. However, they are referring to year over year gains and NOT month to month gains. Year over year means that they are comparing todayÃ¢â‚¬â„¢s values to prices that date back to 365 days ago. It is important to point out that prices were still rising fast in June 2013. ThatÃ¢â‚¬â„¢s just not the case today.
Today there are 7,363 homes on the market. Last year there were 4,423, nearly 3,000 fewer. Demand, the number of new pending sales in the prior month, is at 2,753 today compared to 3,154 last year, 13% fewer. Put those numbers together and the market is completely different and so is the approach that seller need to take in order to be successful.
It is worth repeating over and over again; sellers can no longer get away with overpricing. In 2012 and the first three quarters of 2013, sellers overpriced their home and miraculously still obtained multiple offers and fetched values over their inflated asking prices. There is a very simple explanation for why this occurred. Even though prices were much higher than the most recent comparable sales, they were still perceived to be great deals. With very few homes on the market, buyers were willing to pay extra to get into a home that was affordable, so appreciation was rampant. LetÃ¢â‚¬â„¢s flash forward to today: prices are much higher, there are a lot more homes on the market, and because affordability is becoming a much larger factor, buyers want to pay close to a propertyÃ¢â‚¬â„¢s Fair Market Value. As a result, price appreciation has slowed to a crawl.
No marketing genius can overcome the hurdle of unrealistic pricing.
Overpriced sellers have to ultimately decide on one of two options: (1) reduce the asking price to a realistic level, or (2) pull the home off the market. In reducing the asking price, donÃ¢â‚¬â„¢t just go half way, leaving room to negotiate. This is a silly tactic that results in rationalizing keeping a home overpriced. Remember, an accurately priced home in a sellerÃ¢â‚¬â„¢s market like today will procure a lot of activity with a high likelihood of multiple offers.