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Cape May Court House, NJ 08210
Phone: 609-465-4650
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James M. Rixey

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Get It Priced Right The First Time

10 Dangers of an Overpriced Listing

  1. Sellers lose the positive impact of the newness of their home on the market, and can lose prime selling time.
  2. Buyers concentrate on objections and minimize good features of the home.
  3. Sales associates lose enthusiasm about showing properties that Buyers reject due to price.  They prefer showing homes where their chances of selling are better.
  4. Sellers place themselves in a poor position to obtain maximum dollars, since property can become “shop worn.”
  5. Sellers lose valuable time.  Time is wasted in preparing for showings; families are separated needlessly when an out of town transfer is involved, and school openings are missed.
  6. Sellers lose money in more house payments, utility bills, taxes and insurance.
  7. Buyers become suspicious, thinking that there is something wrong with either the home or the neighborhood, when a home has been on the market too long.  Buyers always ask how long the house has been on the market.
  8. Negotiations between Buyers and Sellers usually break down when a home is overpriced because a Seller does not recognize a good offer when he/she sees one.
  9. Seller loses opportunities to buy another home, or incur additional costs when carrying two mortgages.
  10. Statistically homes that are on the market longer sell for less than fair market value.

Why buyers do not make offers on over-priced listings

When sellers wonder why they have not received an offer on their home, they should first look at the asking price - it's probably too high. But, "buyers can always make an offer, right?" Of course they can, but serious buyers usually don't make an offer on a home that's priced too high.
 
When the inventory of homes for sale is high, it's easy to understand why buyers do not waste their time on a property that is priced above the competition. However, an over-priced listing may not attract an offer even in a low-inventory market - how come? The answer is that buying and selling a home is an emotional experience and psychology comes into play. Some buyers shy away from making a low offer on a listing because they don't want to offend the sellers. This is particularly true if the buyers have a serious interest in the property. They often prefer to wait for a price reduction before making an offer on an over-priced listing.
 
Sellers often think that if buyers like their home enough, they'll pay more for it. The truth is that a home is worth a certain price, which may not necessarily be the price the sellers want. Buyers know the market value better than sellers. While sellers may look at a few houses before putting theirs on the market, buyers look at dozens of homes. By the time they decide to make an offer on one, they have a good idea about housing prices. It's almost impossible to convince today's cost-conscious, consumer-savvy buyers to pay more than the fair market price for a home.
 
Sellers who put an unrealistic price on their home send a message to real estate agents and to prospective buyers: Here are impractical sellers who may be hard to work with. Like all of us today, home buyers are busy people who don't want to waste time with unreasonable sellers. Most would rather wait for a price reduction before starting to negotiate on a home they really love.
 
MORE HINTS:  When sellers discover their home is priced too high, they should reduce the price immediately. A home is most marketable when it is new on the market. If it doesn't sell within the first month or so, agents and buyers lose interest. Sellers may be reluctant to drop their asking price. But, keeping it on the market at an unrealistic price can result in a lower selling price when it ultimately does sell. If sellers lower the price when the listing is relatively new, they have a good chance to keep the marketing momentum going.
 
New listings stay fresh in real estate agents' minds for only the first few weeks they're on the market. That's why it makes sense to lower the price on an over-priced listing early in the marketing period. After a listing has been around for a few months, a price reduction will not have the same impact because many agents have already forgotten about the property.
 
Buyers don't like to make an offer on an over-priced listing and real estate agents don't like to show them. Put yourself in the agent's shoes. If you're working with well-qualified, motivated buyers who only want to see well-priced homes that suit their needs, why would you risk losing credibility by taking them to see an over-priced property?

Facts About For Sale By Owner (FSBO)

Saving Commission    Most owners try to sell their own home in order to save the broker commission.  The fact is that buyers know this and usually make an offer based on this, deducting the amount of commission you would have paid.  You actually save nothing but gain headaches.

Underpricing    Most owners are not familiar with the rapidly changing real estate market and the characteristics of supply and demand for a particular type of house.  This could result in underpricing and by the time all costs and expenses are paid, you could net considerably less that if the sale were handled by a broker.

Justifying The Sale Price     Most buying prospects do not make buying decisions until they feel the selling price is right and justified.  Rarely does an owner have a record of sales of closely comparable homes in a general area as one justification for the selling price.    The broker has access to market date that can be used for this purpose.

Qualifying A Prospect     Most owners are not experienced in qualifying buyers from all aspects, including financial ability and qualifications of purchaser to buy the house.  This could result in a contract with a buyer that can not secure a mortgage, thus losing valuable time and often expense and having to start all over again.

Safety     The "For Sale By Owner" sign in the yard is an open invitation for anyone to ask to see your home.  This could result in an undesirable person in your home when the wife or children are alone.  This could pose a dangerous situation.  There have been instances when thieves have posed as prospective buyers only to see what  might be of value in the home.  A real estate professional will make sure that the people he brings through are legitimate home buyers.

Advertising Exposure       Most owners selling their own property are advertising only one home, their own.  The broker is advertising many homes by comparison.  Through a brokers advertising, a prospect may call about one house and be channeled to one that best fits their needs, yours.  Brokers also have the access of Multiple Listing Service (over 100 offices) that an owner does not.  This provides more access to the buying public.

Negotiations    A buyer may be reluctant to discuss some matters directly with an owner because of personal involvement in the property.  A sale could be lost  and also  the objections that a prospect may have go left unsaid.  These objections are vital in order for the seller to know what prospects think about the house.  Without these comments, corrections to the property may not be made and more prospects and a possible sale could be lost.  A broker acts as an impersonal go between for such negotiations.  He is much better equipped to handle objections and questions and can relay these points to the owner.

This FREE advice is provided to by:  RIXEY REAL ESTATE AGENCY

                                      

                                                  

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