Seller’s Remorse: The buyer sets the price

Across the country, real estate markets are improving with some areas improving faster than others.  Our area, the Puget Sound Region, has shown a year-over-year sales increase for June ‘09 over June ‘08. That year-over-year increase hasn’t happened in almost a year. California is having brisk sales because the mortgage rates are at historic lows and home prices have come down to where people are willing to buy again.  So if you have to sell your house, pricing is more critical than ever before.  Buyers are very aggressive these days with their offer price and it is understandable.  Inventories are higher than normal, so a buyer has a lot to choose from.  Sellers need to understand that if they want or really need to sell their home, it’s not about the price they think their house should get, it’s about the price the buyer is willing to pay.  Too many sellers personalize the price they want their house listed for and they lose out on buyers which costs them lots of money.  Many sellers want to try a slightly higher price than recommended and see if a buyer will pay it.  This is not a good idea.  A house usually gets its best traffic when it first comes on the market.  Willing buyers, not having found what they want, look at the new inventory. If a buyer looks at your house and decides they don’t like it or they don’t want to pay your price, they will move on and buy another house. Now you are forced to wait for another willing and ready buyer to come along.  If your house doesn’t sell, you’ll likely have to reduce the price enough to attract another buyer’s attention.  In the meantime, you are still making the payments on the house, having to keep up the maintenance and most important of all, you can’t move on with your plans to move.  We had a dramatic example of this recently with a client that wanted to price their home at $625,000 in July of last year.  Their competition was new construction homes that weren’t as nice, but were selling for $125,000 less.  The feedback was that the house was really nice, but no one was buying in that price range in that area.  The house finally sold at $500,000 in May of this year to a buyer who thought that it was the nicest house she’d seen.  The buyer got a great house but the seller lost time, money and opportunity.  The seller had the cost of their mortgage for all the months they were on the market, they had to keep up the landscaping, they had the inconvenience of showing the house for 11 months and the interest rates had increased enough so that their buying power had decreased by over $65,000 for their next purchase.  The moral of the story is, a house is only worth what a buyer is willing to pay at any time.  Not always what a seller wants to hear, but the truth, whether it is a weak or a strong market.