Yet Another Reason to Avoid Over Pricing Real Estate
I am working with an extremely nice pair of clients right now -due to a job transfer to Westchester County, they are moving to the area from out of state. They sold their own home quickly, and we have been out and about looking. The selection process has brought us to a number of homes, some of which were gone before we could make an offer. It has been an education.
You see a lot out there, and one particular home was quite a good fit-unfortunately, it seemed overpriced by about 10%. Sometimes you have to employ a strategy, and in discussing the merits of making an offer, my advice was that while an offer might be percived as low, it might fly and circumvent those souls out there watching the home online waiting for the price to drop. My client then shared a doubt that many buyers may have when dealing with an overpriced home.
What if the real reason it is overpriced is because it would be a short sale at true market value?
GOOD QUESTON. And yet another reason why overpricing real estate is destructive to a good closing. Sellers who resist pricing their home more realisitcally often say that buyers can "make an offer." Well, what if the high price makes them wonder if making an offer is a waste of time?
We already beat our heads against the wall trying to explain that when real estate is overpriced, the only offers you get are from people who are comfortable with low-balling. Reasonable people are uncomfortable with a large spread, even if the offer is actually fair. Most people don't even bother coming out to look at overpriced homes. Why bother? They watch online, and wage a war of attrition with the seller over a period of months-sometimes years-until the price fits their sense of value.
The fear of it really being a short sale is a new one, and in this case, it could well have been legit. We made an offer that was 22,000 higher than a very comparable home- and the counter was still in the stratosphere. The listing agent did an admirable job of advocating for their price, but couldn't back it up with market activity- just well stated, elegant and clearly experienced salesmanship. But no clear comparable sale. In the end, I translated some of her references to mean that, at our price, they would indeed be upside down. Or, perhaps, not have enough money to make their next move.
Still, they were another casualty of overpricing, and I was told we weren't the first offer that didn't pan out. As time goes by and it becomes a stale lisitng by autumn, it could well become a short sale as reality sets in. If so, my buyer was prescient.