I remember reading an article about a year ago dealing with chasing the market down. What it covered was how some sellers hear about how the real estate market has taken a turn and some of the offers that are coming in are lower than expected. The way that some sellers have decided to overcome this is to list their homes or condos a little bit higher than what it should be listed at with the hopes that when a low offer comes in it will be closer to what they originally wanted to sell their homes for. The problem with listing it above what the market (and Realtor) recommends is that it won’t be shown and when people look at the comparables that are priced right the other properties will be the ones that are shown. Then, the seller must lower their price, but now the price that home should be listed for is much lower than what was recommended earlier.
The scenario would be something like this: the seller wants to sell their home and the market (and the Realtor) recommends that they should sell their home for $199,900. The seller hears all the news about the real estate market and decides that with the low offers that are coming in they should list their home at $219,900. This way when someone submits a lower offer it should be somewhere closer to the $199,900 amount. Well, because of the comparables, or similar homes in the area, are all listed closer to the $199,900 amount those homes or condos will be the ones that the buyers will be looking at. The seller’s home will sit there without any showings. About four to six months down the road the seller decides that maybe they should list their home where the Realtor suggested and now decide to lower it to $199,900. The problem is that maybe now the home should be listed around $189,900. So, your seller is still listed “over” what the market is suggesting. A drop form $219,900 to $189,900 seems like a really drastic drop as well. What the seller ends up doing is “chasing the market down”.
In this scenario the sellers that listed their homes or condos where they needed to be in the beginning were selling, and the seller that listed high will end up having to keep lowering their price until they are within the right range for where the property needs to be. You can take this scenario and add on to it another four to six months from when they finally lowered their price to $199,900. The market was saying to be listed at $189,900, now after more time they decide to lower it to the $189,900. We end up still chasing the market. Now, the seller’s home should be selling for less. If the seller would have priced the property correctly in the beginning they could have had it sold and at a higher price.
This is precisely why a Realtor should present sellers with a comparable market analysis. It helps to price the property from the beginning where it should be listed. There might be low offers, but this is where the negotiation skills of your Realtor come in. A seller can counter a low offer and negotiate to get the offer to where it is acceptable to them. There are some buyers that are out there looking for a great deal and only submit the lowest of offers, but remember you don’t have to accept what you aren’t willing to accept.
This is just some information to consider when you might decide to list your vacation home or oceanfront condos here in Myrtle Beach. The prices for the property I used were made up to illustrate the point.
Whether you are an agent, seller, or even buyer please share your thoughts with us.