That’s Insane!

Speed read:

• Insanity is doing the same thing over and over but expecting different results.
• Hire an agent who will give you the “cold, hard facts”.
• Know the neighborhood’s low, medium, and high price points.
• Assess your property “through the eyes of the buyer”.
• Honestly review your asking price and get off the “on the market, off the market” merry-go-round.
• Time is money when you’re selling; Days-on-Market are determined by Full Market Value.
• Positioning the property at the outset within a well reasoned range of Full Market Value will maximize return of your equity dollars.

Insanity is often defined as doing the same thing over and over and expecting different results.

That being so, if you’re re-listing your property after it’s been on the market why would you continue marketing your property at a price point the market has already rejected? That’s insane!

I’ve seen this play out many times: a seller puts their property on the market at $X price. The property is on the market for weeks (or months) but there’s no takers and the listing agreement eventually expires: the property comes off the market. Seller puts it back on the market with either the same agent or a new one at the SAME, or even a higher, price. If you’re serious about selling why would you waste time continuing that failed experiment?

Not to be overly critical of other realty agents but many times the price at which a property comes off the market is subsequently used as the benchmark for re-listing the property! The thought process goes something like this: if the other agent recommended $X price, why challenge that? THIS PROCESS ASSUMES THAT THE FIRST AGENT GOT IT RIGHT BUT THE FACT THAT IT DIDN’T SELL SAYS THE FIRST AGENT GOT IT WRONG! If your current (or new) agent won’t have a serious talk with you about repositioning the property but instead recommends re-listing the property at the old price – or higher – you should show them the door because they’re not working in your best interest. An Expert Listing Agent will happily show you the high, medium, and low value ranges for your neighborhood and will objectively discuss with you where your property stands. Although it can be a “sensitive” topic, it’s not that complicated.

High value: Typically, the higher values come from those properties that are in move-in condition and require no added major expenses by the buyer after the sale. Most, if not all, of the major components have recently been replaced. About 5 to 10 percent of properties in established neighborhoods fall into this category.

Mid value: The mid value range represents properties that show normal wear and tear for their age, and although don’t require any immediate buyer expenses after closing, they have one or more big ticket items that will need to be replaced within the next 5 to 10 years. This includes items such as roofs, air conditioning units, counter tops, appliances, flooring, pool resurfacing, landscaping upgrades, driveway repairs, and exterior paint. About 75 percent of the homes in the neighborhood fall into the mid value range.

Low value: Lastly, those properties that show excessive wear and tear or have been neglected during their life span fall into the low value category. In most instances, these properties have been tenant occupied for a long period, sitting vacant, or in foreclosure. These properties will very likely require extensive repair and replacements of the major components by the buyer after closing, many times before occupancy. In most well kept neighborhoods, these properties only make up about 5 to 10 percent of the homes.

The importance in identifying the high, medium, and low value range for your neighborhood is that it allows you, the seller, to take an objective look at your property as seen THROUGH THE EYES OF THE BUYER! If your property is objectively deemed to be in move-in condition then by all means position it at the top of the price tier. If on the other hand your property needs repairs and replacements of the major expense items now or in the not too distant future, then placing it in the mid to lower price tier will get you the quickest results.

For serious sellers time is always of the essence.

Not to demean other Realtors, but sometimes an agent’s desire to have a listing conflicts with their obligation to give unbiased counsel to the seller. Bringing an overpriced property to market – or in this context, back to market – benefits no one but instead ends up costing everyone – the seller, the agent, and the brokerage – time and money.

Setting the asking at Market Value at the outset is critical if you want to save time and money. Here’s a graphic that depicts historical market reaction to pricing:

This graphic shows typical market interest level for a property new on the market and the risk of over positioning the property:

Why does this matter?

When a property doesn’t sell unhappy sellers will insist that the reason their property didn’t sell had nothing to do with their asking price but instead say that their broker/agent didn’t do enough promoting the property. I assure you with 100% confidence that there’s no amount of money that can be spent promoting an over priced “product” that will result in a sale. Even if a buyer is willing to pay the “higher than market” price, unless they’re paying cash there’s safeguards in place to prevent the sale from going forward – in most cases that’s the appraisal for the mortgage financing.

If you’re serious about selling, positioning your property within a well reasoned and supported range of Full Market Value will yield the best results. Remember that there are ongoing costs to owning real estate and the faster you can get into contract and to the closing table the sooner you can terminate those ongoing ownership costs. When it comes to selling your property, acting rationally and not emotionally will maximize recovery of your equity dollars and will always yield the best results.