It has long been the contention of a substantial percentage of professional real estate people that if something isn't selling, it's time to lower the price. Homeowners should seriously question this recommendation from their agent.
I have found that more often than not, that this is an incorrect conclusion and, therefore, a disservice to the client. In other words, price is not the problem.
If we assume that a well-compiled market analysis was done, using current and pertinent data when the home was entered into the marketplace, then it is illogical to conclude that the property hasn't sold because it is priced too high.
What if, in fact, it is priced too low and isn't selling? Does that still mean the price needs to be cut further, or could it mean that because of the too low price, the property is perceived by the market to be substandard?
Rather than thinker with price, a far better and more just approach is to analyze the appearance of the property and compare that to its competitors. The listing agent and his client should actually go preview competitors, even if it's no more than for curb appeal.
And then do two things. First, prepare another Comparable Market Analysis to see if things have changed. If they have, make adjustments accordingly.
But more importantly, work to make the home comparable in curb appeal and interior appeal to its competition. When possible, make it look better.
When you get through, you may find that you can raise the listing price! I've actually done that many times, especially when I've taken over another agent's expired listing. We've made some visual changes, and within a short period, the previously unsellable house has sold!
If you have your Dallas area home listed and it hasn't sold, call me. Let's see what the problem is.
Copyright 2008 - William S. Cherry
Bill Cherry has been marketing real estate since 1964. He has sold thousands of homes, apartments and commercial properties.
I think part of the problem is the average homeowner doesn't want to believe what their home is really worth. No matter what the comps say. And in this market, just because you start with one price, doesn't mean that 2 months later those numbers will still be valid.
I read that some states appraisers are looking for like comps closed within 90 days. That's a tight window.
Sherry, Jim and Ulises
If you do nothing else, you have to get the prospective home buyer out of the market as soon as he sees your listing. If he (she) doesn't find a perceived value that matches your listed price, they either keep on looking, or they try to adjust your price to meet what they have decided it's worth.
If their perceived value matches your price (or thereabouts) you're going to make the sale, be darned the appraisers and their trying to thinker with values.
And best of luck, Ulises. When you get through with this funny market and things return to normal, you are going to be fixed for life when it comes to experience.
Billycherry
MISS JOANIE-
I swear I don't know. I do know that I can usually study a home that's failed to sell, and zero in on why in a matter of a half-hour or so. Rarely is it price, no matter the condition of the market.
If I tell someone to lower their price 5 thousand bucks, it costs them 5 thousand bucks. It just reduces my commission (if it sells) by only 300 bucks. So we won't feel that decision with the same impact. Consequently, I think too many real estate sales people take the easy way out by talking clients into reducing their price when that isn't the problem.
Billycherry
TO EVERYONE
Barb Hutchinson shows that she thoroughly understands how to be a wonderful listing agent! She is exactly, precisely right. And her clients are most certainly being well represented. Congratulations to her and to them!
If the big deal in the neighborhood of the listing is homes with slate counter tops, why wouldn't the Realtor suggest putting in slate counter tops rather than defaulting to lowing the price by 10 grand? The house still doesn't have slate counter tops.
Billycherry
Miss Latonia
I think your analysis is right on target. I, too, would take the house off of the market until the remodeling and improvements were made, then I'd reanalyze its value and repackage it for the market.
The haunting question remains: If comparisons were done when the house was first listed and that was how the price was determined, how, then, does the same agent have any credibility with the owner when he comes back and says the price needs to be lowered...that that is why it isn't selling.
If I were selling and my listing agent came in with that indefensible rational, I'd fire the agent on the spot.
Billycherry
A home is worth what someone is willing to pay for it. All the comps in the world don't matter if someone isn't going to buy it at the current price. If the comps say $357,000 and there have been no bites in 2-3 months does it make more sense to nose it down to $349,000 so more people searching up to $350 will see it?
Comps are just comps, I can't see into the future and this market is constantly changing - downward. There was a time when a seller could list 5% over the last sale in the same year and get it. Those days are over and stubbornly holding on to price now can be the kiss of death.
Buyers are now waiting for properties to be listed for a long time. They will take the price reduction themselves when they present offers. Those tend to be much deeper than doing a $5k or 10K price reduction (depending on your market).
I'm not trying to change your mind, just give you a different opinion.
Miss Sherry --
Honestly, your position doesn't make any sense at all, although it has been stated and restated for generations, so you are far from alone in that opinion. (Forgive my bluntness.)
The thought that is used so often and that it is absolutely worn out is "A home is worth what someone is willing to pay for it." That is far too cryptic to be true.
Properly stated, it should read, "A home is worth what someone who NEEDS and WANTS it is willing to pay for it, given that they have the financial wherewithal to buy it at that price." And the corollary to that is, that person comes along when he's ready, not necessarily when the agent and the seller are ready for him to show up. It's up to the agent to do everything he can to speed up that process. That's what marketing is all about.
Neither the buyer nor the seller markets himself as the real estate expert. We do. If an agent can't even get the house priced correctly and marketed correctly, that doesn't say much about the depth of his professionalism. I frankly wish there were a way to weed out him and the others like him.
Billycherry
Bill Cherry, It seems you have struck a nerve here. I agree with you completely. Price is not the issue. Finding the right buyer is the issue. Everything is about marketing: Price, appearance, exposure. One can't fail on two of these counts and blame it on the other (price only?). But that is what I read when I surf around AR.
Good post and good for you sticking to your guns.
Bill Roberts
As a home seller it is refreshing to finally read something from a Realtor that isn't all about price.
I didn't get any buyers the last time I tried to sell a house (in FL). So many Realtors were quick to say it was the price when I blogged about the process. To this day (we ended up renting it) I still say it was the market and no amount of price reduction (within reason) would have got the house sold. Luckily I had a good Realtor who communicated this to me and stayed on course with the price (and ended up getting me a renter) rather than assuming it was a 'pricing issue' and dropping it far below what the home is worth.
I have watched enough HGTV shows to know that your post is right on target.
Sara, you prove my point exactly. I know nothing about the FL market you were in. My market isn't nearly as bad as parts of Florida.
If you were in my market I would have told you the following: You have an idea of "what the home is worth" and didn't want to drop the price below that perceived number. Buyers didn't want to pay that number for the house and you ended up renting instead of selling.
Maybe this is where Bill and I can agree - If your agent told you what your home was really worth in the current market, instead of telling you the number you wanted to hear maybe it would have sold. Or maybe you wouldn't have even put it on the market in the first place and just renting it from the beginning.