After doing property profiles on AHB day in and day out, it has come to my attention that most sellers are still overpricing their property for sale. As a potential buyer, I would like to share something with them. Perhaps they are still in denial and believe that buyers are willing (and/or able) to meet them at their sky-high prices. If that’s the case, this should clear things up. If I spoke to a seller today – this is what I would say to them.
I am writing to you on behalf of myself and many other prospective buyers regarding the current housing market. This is not an attempt to mock or ridicule you for your past actions, but rather a letter to inform you of our thoughts as it relates to the buying and selling of real estate today. Surely I cannot force you to read this letter anymore than you can force me to buy your house, but it is to your benefit to at least hear what I have to say. Whether you agree or disagree with me is another story.
There’s no roundabout way to put it so let’s just get to the point. If you are serious about selling your property – price it to sell. If your property has been on the market for more than a month, then it is not priced to sell. Period. The market price is what we, the buyers, are willing to bid regardless of where you set your asking price. If you set the right price, then someone will put in an offer for it – even in a down market like we’re in today.
Think of yourself as a buyer. When you bought the property you’re currently trying to sell, what did you consider? Did you buy it because the current owner said it was worth the asking price? No, I didn’t think so. You bid whatever you thought the property was worth at the time. It’s the same with the potential buyers looking at your property today. Unfortunately for you, most buyers today think the market (especially here in California) is wildly inflated and subject to a steep correction for months or years to come.
That being said, there are still some people who are in the market to buy right now. They just don’t like the asking prices. Generally speaking, these people are not trying to offend you with their lowball offers; instead they’re just trying to compensate for the reduction in home values they expect in the foreseeable future. Wouldn’t you do the same if you were on the other side of the fence? Be honest with yourself. Denial is not a solution and can be devastating to your finances.
Instead of chasing down the market with small, mediocre price reductions every few months I suggest you reduce the asking price today. Not tomorrow, or next week or next month – today. Everyday your house sits on the market unsold is another day you have to swallow carrying costs and maintenance fees. In addition, you also risk losing even more money as the neighborhood comps drag you deeper into the red. The outlook does not look good. With sales volume falling off a cliff and prices starting to slide even in the more desirable areas, buyers are more cautious than ever about entering the market. Your buyer pool will shrink as the housing correction continues and the decline in home prices will be the only factor that will bring buyers back into the market.
If you think things are going to “turn around” or “pick up in the spring” then you’re hanging on a very thin thread. It doesn’t matter what you think. Buyers don’t care what you think your house is worth or what your realtor/neighbor/wife/dog thinks its worth, nor do they care that you need the money to get out at “breakeven” or to pay off that HELOC. They also don’t care what you banked your whole retirement on this property or that you overpaid and looking for someone to bail you out. It doesn’t matter to them. All they see is an overpriced house they’re might not even like that much.
Again, if you’re serious about selling your property – reduce the price. Buyers don’t have to buy, but many sellers have to sell. We have all the time in the world, but you don’t. If you did, you wouldn’t be selling right now. Wouldn’t you rather just rip off the band-aid than to peel it off slowly? Either way, it’s coming off. How it’s done is up to you.