Since 2001 I have seen Wellington home prices sky rocket, hit rock bottom, slowly climb back up and not budge for months, but regardless if it's a seller's market, buyer's market or stable market one thing remains the same; seller's continue to overprice their homes. I think if real estate agents, near and far, were asked what the BIGGEST mistake seller's make they would unanimously agree it's overpricing their home.
In some cases the listing agent may have played a role in overpricing the home because they were the one who suggested the high price and the seller went with it. If you're wondering why a real estate agent would suggest a list price above market value I don't have an answer. Maybe the agent was trying to "buy" the listing and intentionally gave the seller a higher price in hopes they would hire them over the competition who suggested a lower true market price or maybe they're unfamiliar with the area and market conditions. If an agent an hour north suggested a list price based on home values in that area and didn't look at our home values the home would probably be under priced and if an agent an hour south did the same the home would probably be overpriced.
However in most cases it's the seller who selected the high list price. I know sometimes educating a seller about market conditions and reviewing comparables can be an exercise in futility because they decided on a list price long before I walked through the door and aren't going to list for a dollar less even if I provide facts stating otherwise. Instead they choose to ignore the facts and want to "test the market" or feel their home is "worth it" because they have granite countertops and the home that sold down the block didn't.
How can a Wellington seller determine if their home is overpriced?
LACK OF SHOWINGS
Most new listings, even overpriced ones, will have showings the first few weeks. However as the "newness" wears off so will the number of showings unless there is a shortage of homes for sale then showings may continue, but an offer may never come.
FEEDBACK FROM THE BUYER'S AGENT
If the listing agent never told the seller their home is overpriced the buyer's agent might do so through feedback. However a seller should never sit around and wait for this type of feedback to make a price reduction because it's rare for agents to provide their opinion on price. Now if the listing agent did tell the seller their home is overpriced hearing it from another agent may help the seller accept the fact that their home is overpriced, but once again seller's should listen to their agent and what the real estate market is telling them because "nice home" seems to be the most common type of feedback.
SHOWINGS, BUT NO OFFERS
The BIGGEST sign a home is overpriced is regular showings, but no offers, which means the market has rejected the seller's list price. Some seller's will argue and say it's going to take a "special buyer" to purchase their home, that may be the case for some properties and some price ranges, but not for the average 3-4 bedroom tract home in Wellington.
Even with all of the signs some seller's remain in denial about their overpriced asking price and blame the listing agent for the lack of offers or the neighbor down the block who "gave their home away." Some will even start making improvements thinking it will help justify their higher asking price and while I'm a huge advocate for making a home "show ready" when it's done after the home has been on the market for a few months it may not make a difference especially if none of improvements add value to the property. Spending $4,000 on new granite countertops may be more appealing to a home buyer, but it will never add $4,000 in value.
First impressions are EVERYTHING, so when a new listing is priced right it's no surprise that it sells quickly and for top dollar. Why? New listings priced right often cause a "buyer frenzy," a buyer has to have it and doesn't want to lose it, so they submit their highest and best offer. However with each passing day, week and month the "frenzy" fades away along with interested buyer's and a sense of urgency. I'm sure there are several overpriced homes sitting on the market today with interested buyer's, but they won't make an offer and if they do it won't be for top dollar. Many of the of the buyer's I work with try getting an overpriced home for under market value because they have zero competition and nothing to lose.
Selecting the list price is one of the most important decision a seller has to make because once it's out there it can never be taken back. Sure, a seller can always reduce the price, but our MLS has a detailed pricing history for the home along with how long it's been on the market regardless if the home has been re-entered into the MLS. The history ALWAYS sticks with the property therefore agents and home buyer's have access to it.
Ultimately market value of a home is what a buyer is willing to pay and what it appraises for, if an appraisal is required, so if a home is sitting on the market buyer's have rejected the asking price.
My advice to seller's; DO NOT OVERPRICE YOUR HOME, statistics show the longer a home sits on the market the more money you will lose. Reducing your overpriced home doesn't mean you're losing money because you can't lose something you never had.
Originally posted at http://wellingtonhometeam.com/how-can-a-wellington-seller-determine-if-their-home-is-overpriced/