This is an example of what happens when your home is not priced correctly. This example involves a property that is in near my neighborhood and I am good friends with one of the neighbors so I could see this example play out over the course of time.
Background
I personally listed this property on May 24, 2006. This home is a 3 bedroom/2bath/2car garage split-entry home with approximately 1500 finished sqare feet. This home was originally a "For Sale by Owner" and they had marketed the home for several weeks at $148,000. When I first met with these sellers we discussed three critical issues; price, condition and the true market value of the home. At the time of the listing, I felt that $148,000 was very aggressive in terms of price and I felt that the home would sell for perhaps the low 140's. The sellers of course did not want to "give it away" and we listed at $147,000. 44 days later the home SOLD for $144,000 with $4500 in seller concessions. Thus netting the seller $139,500.
This price established a market value of the home at $139,500 in July of 2006.
Fast Forward to February of 2007
The buyers who purchased the home in July of 2006 were now transferred out of state and listed the home in February of 2007 with a competitor for $150,000. The home was vacant and clearly overpriced. This home that sold 7 months earlier did not appreciate to $150,000. They did not make any marked improvements to the home and were instead trying to "break even."
What is the result?
After 337 days on the market and finally reducing the price to $131,500 this home SOLD for $128,000 in a short sale. The home sat vacant for nearly a year, the yard was unkept in the summer and the snow was not shoveled in the winter. The neighbor was of course upset with the new listing company. Is it the real estate company's fault the snow was not shoveled? No, real estate companies market a property, not care for it. However, in the eyes of the neighbor it was the real estate company's fault. Is that fair? No, but perception is reality.
*** Lesson Learned ***
If you are a seller and you overprice your home - it will not sell. If you are a seller, the buyers do not care about what your current situation or what it takes for you to "break even." The longer the property sits on the market the more likely it will sell at a lower price. This could have been avoided. If the sellers would have realized the market value was $139,000 in February of '07 they probably would have sold their home in less time and for more money. In the end it is best to price your home at market value. Ultimately, the market determines market value. Market value has nothing to do with what you NEED or WANT from a property. Trying to "break even" usually ends up costing YOU money and you end up digging yourself deeper in the hole. The best option is to stop digging and to sell your home AT market value.
Thanks,
David Matney, CRS,GRI
Alliance Real Estate
