As active realtors who are familiar with the local real estate market, we usually have a pretty good idea how much a home will bring in the marketplace. It is always an early item of discussion with a homeowner who wants to sell. In recent years, it has often been a painful discussion that meets with resistance from the homeowner. Our community has a number of homes that have been languishing on the market for years.
Setting the list (asking) price for the home is ultimately the decision of the homeowner. As realtors, all we can do is provide our opinion based on the current market. Sometimes, we turn down the listing if we feel the asking price is unrealistic. More often, we agree to list at the inflated price with the understanding that we will have further conversation about price reduction after the asking price has been “tested” for a month or so.
We are currently in a “buyers’ market” in Southwest Florida. Buyers (and their realtors) are very attuned to the market. There simply are no stupid buyers out there who will be willing to pay more than the market price for a home. They will pay approximately the amount that similar homes (comps) in the area have sold for in the past 3 to 6 months. A little more if they really love the home; a little less if they think the seller is desperate. What the seller paid for the home years ago, or what the seller wants to receive today, are irrelevant to the buyer.
So, what happens when a home is listed way above its market value? In our experience, buyers will react in one of three ways:
- Many of them will not bother to check out the home, because it is priced too high for them to consider. This limits the size of the buyer pool for this home;
- If a buyer does check out the home and likes it, he or she may not be willing to submit an offer because the price they have in mind might be considered an “insult” by the seller; and
- If a buyer does check out the home, likes it, and submits an offer, the price will not be based upon the asking price. The asking price will be an irrelevant issue. The offer will be based on the price of recent sales of similar homes. Period.
Of the possible scenarios above, two are very bad for the homeowner who wants to sell the home. The final scenario is neutral with regard to the list price—it simply was not a factor.
The Boeglin Team does research on the current market, and provides an honest, realistic opinion on the listing price. Pricing the home at our recommended level is not a guarantee that the home will sell in the next 30 to 90 days. However, it does mean that the maximum number of buyers will be considering the home. The larger the buyer pool, the better the chance for it to sell.