Most homes on the market today remain overpriced. It seems more often than not neither the agent, nor the seller want to go where they should to price the property to sell. A good agent will proactively and aggressively discuss pricing strategy with his/her seller if they really desire to get the property sold.
Today’s market requires sellers to price their property under market value if at all possible. It’s just far too difficult to price homes above a declining market and then trying to constantly find the market with several price reductions. Too often I’ll see someone make somewhat regular price reductions and then after 5 or 6 months of no action, they’ll then take a big reduction to definitely get the home under market value. At that point, it’s a bargain to many, and the home finally sells.
Below is a depiction of how Realtors used to price property in 2005 and before when we had a rising market:
Here’s what I see a lot of in today’s market. The home is priced above the market from the start and with a declining market, the delta between your initial asking price and where the market is, grows by day. That’s why sellers might say that they are already down $35,000 on their asking price or 6% already. Yes, but it’s still not at the market price. The faster you get it to market price, the better off you’ll be. The chart below depicts where the vast majority of properties are positioned in today’s Twin Cities market:
The chart below depicts what I would describe as the optimal pricing strategy in today’s market. Yes, I know this is very difficult for sellers to come to grips with, but given the competition from normal sellers, new home builders, and now the banks, this is the strategy that will get your home sold. If your home doesn’t have an offer in the first 21 days on the market, a price reduction will be necessary. The latest you should try to hang on to your present price is about 30 days, but that will ultimately cost you in a lower selling price.
The faster you are able to get to the true market value of your home, the faster you’ll get an offer and the higher the selling price will be.