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Buyers always want to know how long a house has been on the market. If it's been on the market for long, they ask "what's wrong with it? Why didn't it sell already?" Their sense of urgency is far less. But if it is new on the market and well-priced, they will want to move fast, and will assume that you, the seller, is not sufficiently motivated to accept a lower offer. If it has been on the market for a while, they will be in no hurry. They will put off action, shop around some more, and maybe find something better and cheaper, expecting your house to still be there to fall back on if necessary.
Buyer agents will frequently make a market analysis of properties their buyer is considering purchasing. A house that has been on the market for a long time encourages "low ball" offers, since buyers assume that the seller is getting desperate, and they could be right.
Even if you do get your (high) price, unless the sale is for cash or you are carrying a mortgage note for the buyer, a lending institution will require an appraisal of the value of your house. Appraisers are neutral third parties who confirm for the lender that the buyer has not paid too much for the property. They get paid whether it sells or not, and are only interested in protecting the lender from lending money on a property that is not worth as much as a buyer has agreed to pay. They will compare it to three other properties in the immediate neighbourhood that have sold within the past six months. Contracts on houses at prices higher than market value will not appraise at the contract price and this is a contingency built into the contract price. Even if the appraiser somehow comes up with the contract price, loan underwriters sometimes reduce the appraisal amount themselves unless at least one of the three comparable properties sold at a higher price than the contract price of your property.
There is a direct correlation between the initial asking price, time on the market, and the final selling price. It is a fact that houses that are correctly priced from the beginning actually do sell for more than houses that are initially overpriced.
Real estate agents and their clients like to look at new, fresh listings. It is also a fact that most homes are not sold by the listing agent, but by another agent, either in the same office or in a cooperating realty. The multiple listing service (MLS) and its computers are the primary tools enabling an agent to set up an itinerary of houses to show their prospective buyers, and any real estate agent can tell approximately how long a house has been on the market by looking at the MLS printout of your property.
They are looking for houses that are most attractively priced within their buyer's resources, hoping for a quick sale. Other agents will be working as agents for their buyers, trying to find the best house at the best price for their buyers. And they will freely offer their opinions on the pricing of your house.
If, in their opinion, your house is overpriced, they will bypass it to show more competitively priced houses or worse, they will show your house in order to show how much better another similarly priced house is by comparison. They will use your overpriced house to sell the competition.
If you've had your house on the market for a while and it doesn't sell, and you do lower the price, many agents will not notice the new price, and will only remember that it was "overpriced" and won't show it. In the meantime, your house will get shopworn, you will become tired of leaving frequently so that an agent can show your home, and you will get tired of trying to keep it in show condition all the time.
You might be concerned that we might want to under price your house in order to get a quick sale. On the contrary, our commission usually relates to the final selling price, and any real estate professional will want to get top dollar for your house as well as a quick sale. It will surely sell quickly if it is under priced, but it will sell equally fast if it is correctly priced.
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Copyright ©2009 Peter Kunz. All rights reserved. |
Royal LePage Partners Realty is an independently owned and operated brokerage. |
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