Diane White

When it comes to selling a home most sellers want to make sure the amount advertised reflects the price they paid for the home, upgrades, maintenance, location, beauty, real estate fees, and profit. The seller can ask any price they want for their home, but will the buyer pay it? I have shown many sellers a Comprehensive Marketing Analysis (CMA) and color photos of the exterior and interior which estimates the price of the home to be $200,000, only to have the seller reply "see this proves my house will sell for $299,900 - besides I need to price my property high so I will have room to negotiate."

The seller looks at their home t rose colored glasses. That white tile that was popular in the 80's may only measure 3x6 ft in the entryway, but that seller believes it is custom. Oh, the bathroom has a stock door instead of a window, must be custom! The kitchen has a built-in hutch. Must be custom, we've never seen that in a house before! The patio was built in weekend by the husband and a few friends in exchange for pizza and beer. Must be custom! We won't even discuss the fact that the patio does not have a permit, and was not built to code!

What about all the maintenance the seller has put into the house? During the 15 years the seller lived in the house the carpet, water heater, fence and appliances were replaced. The seller definitely believes this increases the price of the home. It does not matter that when the seller bought the home all these items where in decent condition, the seller just wants to be compensated for the money they put into the house!

Oh, the neighboring houses have pools. "Who wants a pool?" The average temperature is 105° in the summer, but the seller's home can't be worth less because they don't have one! The neighbors have granite counter tops and the seller has white 4x4 tile counters. "Well", the seller replies "my tile is in good shape and besides I put in new appliances 8 years ago." (Which are towards the bottom-of-the line appliances). When the seller compares their house to a house in a far better neighborhood or to square footage that is much greater than theirs, they just look at you blankly and continue with their comparison, even after you explain why that particular home is not a good comparable.

So what happens when a buyer actually wants to buy the house at the over-inflated price? The bank doing the loan sends out an appraiser to make sure the home is valued at the price the buyer wants to pay. Since the bank is actually putting up their money, they want to make sure the house is a worth what they are investing. If the house does not appraise the buyer has to make up the difference between the contract price and the appraised value out of pocket. Since most buyers just have enough money for their down payment and cost of loan, they are unable to make up the deficit. This presents the seller a choice. Lower their price to the appraised value or look for another buyer, which will only lead to the same scenario in a few months.

After the house has been on the market and few buyers are touring the house, the seller is forced to make a decision: take the home off the market or lower the price. If the seller lowers the price to where it should have started, now the buyers are not even interested in the home because they see that the home has been on the market for over 100 days. "There must be something wrong with the home or it would have sold earlier." If the seller has to sell, he then may decide to lower the price even below the first price that was suggested to him. Perhaps a bidding war would have occurred if the house was priced aggressively from the beginning, and the seller would have made more money. Too much time is lost, the seller is frustrated, and money is lost due the fact that the house was not priced correctly to begin with.