Why the “MASSIVE PRICE REDUCTION”?
Lately I’ve seen some truly remarkable price reduction e-flyers landing in my email. They seem to tout the reduction as a great thing that should make my clients happy and eager to buy their home. I don’t see it that way, and I feel these massive reductions are hurting all of us.
Obviously as agents many are being asked to list homes at absurd prices that do not accurately reflect the marketable value of the home at the time of the listing. I view it as seller’s denial. Apparently some people out there feel they still hold a lottery ticket that will enable them to reap huge profits in a short amount of time. Because of that belief, they still want to list their homes at dream prices in hopes they can cash in on the sales frenzy of yesteryear.
All this has accomplished (because their certainly not getting those crazy prices) is that buyers out there are lead to believe the market is crashing. I recently received an email from a client that has been looking at homes and she said she wanted to wait until next year when prices have stopped tumbling downward. Her belief this was happening is based on the fact that homes she has viewed now reflect price reductions of up to $65,000 shortly after hitting the market. Also many homes that the MLS list as Sold are showing accepted offers 25k under asking and often more.
I really don’t see this as a market crash, but more of a reality check. If you list a home, and then two weeks later drop the price sixty five thousand, then I suggest you listed it absurdly overpriced to begin with. I tell my clients if you put a crazy price on your house it will not sell, it’s that simple.
I realize we can’t control what people ask for their homes, but we can educate them, and when necessary decline the listing. We are doing them no favors by listing the home at a crazy price to appease them (knowing it won’t sell), and then dropping the price drastically once they realize we were correct in our assessment. We are in fact creating an illusion of a market crash.
I recently had a client that wanted to list her home $50,000 more than it was actually worth. I suggested we get an appraisal to support the price and she declined. She then went forward and listed it at an appropriate price. It hurts the entire market when we inflate the listing price and then tumble it down in a couple of weeks; or do so knowing it will likely sell for an offer that’s considerably less and more appropriate.
But, that just my opinion.
(2 votes, average: 4 out of 5)
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I agree that many buyers are in value denial, but think in a large part that has been because many real estate “professionals” have been telling their local clients that they could continue to expect double digit appreciation year after year.
Michael - I’m wondering what would you have done if your client didn’t want to list at an “appropriate” price - would you have still listed it?
On my street here in Bellevue, we’ve had a number of homes listed for months at ‘dream prices’. They’ve had price reductions of $20-30k, but what they really need is price reductions of $200k. There are still a lot of dreamers and fishers out there and a long way before this market is corrected.