It is not the price
By James Wedgeworth on June 22nd, 2009I recently went on a real estate listing appointment on Hilton Head on a home that had been listed with another agent for about a year. When I sat down to go over what was going on in our market, the owner of the house said that the one thing he knew for sure was that there was nothing wrong with the price on his property. I asked him how he came to that conclusion. He said that he had it on the market for about a year and I have not had a single person offer me less than what I am asking, so obviously everyone who has looked at my house thought it was priced correctly.
It has been our experience that if a house has been on the market a year and no offers have been made, it usually means that the buying public thought that there were other homes that were better priced, in better locations or in better condition and those were the ones that people were making an offer on.
When I explained this to the seller, he kind of scratched his head and said that he had never thought of it that way. He just naturally assumed that if people were not making his offers, then it was for reasons other than price that they were not buying his home.
People will look at several homes and will develop a short list of the “best values” and they will look at these homes two or three times bef0re they decide which home is “right for them”. At this time they will usually make offer – usually this offer is less than the people are asking and they try to negotiate the best deal.
One of the disadvantages of high inventory is that there are other homes that they consider to be good options. There might be three homes on the short list and they like all three of them and all three will work. They will make an offer on their first choice and if they are not pleased with the price they might move on to their second choice. As the owner of their first choice, you need to try and work with them and maybe come off your price more than you might like.
When the real estate market is strong as it was in 2004 and 2005 there probably is not a second choice – we had very little inventory and if they liked your house and made an offer on it, it was probably a pretty good indication that there were not a lot of other options out there for them. At that time you could be a little firmer on your price because you knew they did not have a second option.
Having an understanding of the market and the process is why that seller needs to have you by his side.
Funny, but I just had an agent call me to ask if it is okay for her client (a buyer) to make an offer. I assured her that my client, who has been on the market about 50 days, understands that someone will be making an offer!
Pricing is essential in any market, but it is a starting point for getting a buyer to put you on the short-list.