New Jersey

As an agent with David Realty Group in Westfield, NJ, I have ironically been working with 3 buyers this week who perpetually lowball every offer. Family #1 - are searching for Westfield homes - Upon walking into a house today that we were visiting for the first time at 670K, they said what should we bid - 600K? I told them I'd have to see it first and after seeing it, I would need to run the comparables. Regardless of how much time I've spent educating each buyer on how the real estate market "works", they continue to bid lowball offers. I would imagine that at some point, 2 of the 3 families will realize that we continually lose our bids and they are still without a home and that perhaps the method I am suggesting is the correct one. The 3rd family - are searching for Springfield homes - would like to move but they don't really need to. All three families have a common denominator - they are first time buyers being coached by their parents who bought real estate in the 80's before there were computers, when people would have to go down to the town and waste hours finding out what recent sales may have taken place in the area. Therefore, seller and buyer were essentially 'clueless' and lowball offers were entertained and sometimes accepted. Today, the buyers, the sellers and the realtors know exact values of homes b/c we all have every website imaginable to find out everything we need to know about a home. In the rare ocassion that a home is grossly mispriced in today's market, the lowball offers are expected and acceptable but when a home is priced to sell, lowball offers will get a buyer no where but the home they are currently in.

Original Price: $1.3 Million / Sold at $695,000

There's a great saying in the real estate business. To succeed in life, you want to be:
The First Child
The Second Spouse
The Third Realtor
And like with most sayings, there is some truth in that statement, as agents who pick up listings after sellers have made major mistakes will attest.

But We Want More Money

When the average seller sits down to interview real estate agents, it's easy to get caught up in the excitement over choosing a sales price. More money means more financial opportunities for the homeowner. Perhaps it means the seller can afford to buy a more expensive home, help pay for her child's college education or take that greatly overdue vacation. Unfortunately, uninformed sellers often choose the listing agent who suggests the highest list price, which is the worst mistake a seller can make.

Establishing Value

The truth is it doesn't really matter how much money you think your home is worth. Nor does it matter what your agent thinks or ten other agents just like her. The person whose opinion matters is the buyer who makes an offer. Pricing homes is part art and part science. It involves comparing similar properties, making adjustments for the differences among them, tracking market movements and taking stock of present inventory, all in an attempt to come up with a range of value, an educated opinion. This method is the same way an appraiser evaluates a home. And no two appraisals are ever exactly the same; however, they are generally close to each other. In other words, there is no hard and fast price tag to slap on your home. It's only an educated guess and the market will dictate the price.

Is it Too Low?

Homes sell at a price a buyer is willing to pay and a seller is willing to accept. If a home is priced too low, priced under the competition, the seller should receive multiple offers to drive up the price to market value. So there is little danger in pricing a home too low. The danger lies in pricing it too high and selecting your agent solely on opinion of value.

How It Starts To Go Wrong

The seller of the Spanish home pictured on this page didn't even interview her real estate agents. She plucked the first one off the Internet because, "He looked like such a nice guy." He priced her home at $1.3 million. This agent never heard the local agents chuckling behind his back because he worked in a different city. After 90 days, the listing expired.

Continues To Go Wrong

The next agent, also from another town, listed the home at $1.1 million. Months passed. Eventually the price dropped to just under $900,000. Still no takers. A few lookie-loos, but no serious buyers.

More Than a Year Later

By the time the last agent was hired to list this home, the seller had grown weary and exhausted. It was now 12 months later. Together, the seller and her agent priced the home at $695,000. It immediately sold for all cash. The sad part is the comparable sales in the neighborhood fully justified a price of $835,000, but the home had been on the market for too long at the wrong price, and now the market had softened.

Agents Specialize in Expired Listings

There is an agent in my office whose basic real estate practice is comprised of calling sellers of expired listings and relisting them at market value. He sits in a small room with a phone, desk and chair, dialing number after number. Last year he sold more than 34 homes valued at more than $13,600,000, and he has 18 active listings right now. He makes a pretty good living repackaging overpriced homes.

Protect Yourself

The question is how much money have those expired listings cost the sellers? The financial loss often exceeds the extra mortgage payments paid and goes beyond the uncompensated hassle factor of trying to keep a home spotless during showings. It affects the value that a buyer ultimately chooses to pay because it's not a fresh listing anymore. It's now stale, dated, a market-worn home that was overpriced for too long. Don't let it happen to you. Don't be that seller of an expired listing.

About.com

By Elizabeth Weintraub

With the collaboration of the some of the most skilled homebuilding professionals in the industry, NJ Estates Real Estate Group / Weichert Realtors proudly presents a variety of new homes and communities in Central New Jersey, all carefully planned around the idea of community and an exceptionally gratifying lifestyle.

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Welcome to Reagan Woods, a subdivision of 10 Luxury New Homes situated on a new quiet wooded cul-de-sac in the sought after community of Berkeley Heights in Union County, NJ. This upscale home site backs to over 30 acres of Conservation. 7 homes have been sold, 1 is ready for early 2012 delivery and 2 are available to start construction in 2012.

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