The Downside of a Great Seller’s Market
Central Ohio homeowners have a right to celebrate! After 8 years of watching your home values depreciate at double digits a year (2005-2012) we are entering our 9th selling season of supply and demand heavily weighted in favor of the Seller.
However, here is the dark secret of this great market: the market for your home is ‘great’ for about a week. If you overprice your home and it doesn’t sell in the first 3-5 days you have lost the “Seller’s” market and have turned the clock back to 2004. Why? Because with homes selling in a weekend, even hours, after a week or so on the market the Buyer begins looking at your home as a stagnant listing. Your home is suspect: there must be something wrong with it, it’s been on the market so long. As a Realtor, I can tell you there is only one thing “wrong” with it: the price.
The Seller overshot the great market and priced their home too high.
Here’s the scenario we see played out every day in Central Ohio: We list your home for $350,000. It should be $340,000 but it’s not so overpriced that Buyers will pass it by. The home gets 35 showings in the first weekend. Thirty of those Realtors respond for their Buyers telling us that the home is overpriced. This “negative feedback” tells us all the reasons that, even in a hot market, the Buyer is unwilling to give you your price. However, five Buyers express some interest. Because we are still in the first few days on the market those five Buyers think everyone is going to make offers. After all, this is how Buyers have been “trained”. They know the pace of this market. So even though the price is a little high we likely will still get offers at or above list price. I have had the experience of getting only one offer on a home but because it was in the first five days — the buyer thought they were bidding against others and paid over list price and gave the Seller very favorable terms.
What are those terms? Far beyond price we are looking for the Buyer with the most favorable financing (or cash!) They will waive the right to ask for repairs, bring money to closing over appraised value, and give you the closing and possession date you need.
Let’s look at this scenario if we priced a $340,000 home at $360,000. Very likely we would have 35 showings and no offers. There is a price point at which Buyers are unwilling to overpay. They will just wait for the next home.
“But we’re not in a hurry” homeowners often say. In it a truth in real estate that time is not your friend. The longer your home is on the market, the less likely you are to get your asking price. The price drops every day your home is on the market.
Looking at our $340,000 home: we price it at $360,000 and get no offers. About 10 days in, you have lost the benefits of the Seller’s market. You have lost the interest of the 30 buyers who jumped on your home in the first days on the market. You now will have a showing a week. The Buyer who comes through your home on Day 10 has a different mindset than the Buyer who came on Day 1. The Day 10 Buyer is looking for why your home hasn’t sold. They know they aren’t competing with anyone and know they have the opportunity to negotiate the price, get the full benefit of a home inspection with repairs, will insist on sticking with the appraised value of the home and want the keys at closing.
The key to getting all the “wins” of a great Seller’s market is to price well. Hire a Realtor who knows how to accurately price your home to earn multiple offers and let you walk away with all this market owes you!
This Blog is written by Kathy Chiero, Lead Agent for The Kathy Chiero Group. Thinking of Buying? Get a copy of my free book “Ten Ways to Win in a Challenging Market” Visit us a OurOhioHome.com Ready to sell? Contact us for a no-obligation analysis of the value of your home.