Sunday, November 04, 2007

 

Overpricing House May Boomerang on the Seller

In an era of falling prices, asking too much might mean your house will sell for less.

If you're thinking of putting your house on the market soon, then I think you'll be interested in taking a look at this article by Kathleen Lynn. Read the entire article HERE.

"Realtors often warn sellers about the danger of overpricing a house. Now they have evidence to show skeptical clients: research by Jeffrey Otteau, a New Jersey appraiser."

"He found that in a market where prices are declining, sellers who "test the market" with a high price usually end up with a lower price than those who price realistically."

Otteau, of Otteau Valuation Group, studied about 4,500 home sales that took place in the first half of 2007.

"He looked at houses that sold in less than a month, and found that they had a median asking price of $599,900 and sold for almost full price - a median of $599,000. When he looked at houses that lingered on the market for more than a month, however, he found that they were priced higher - at a median of $634,900 - but actually sold for less, a median of $585,000. The median is the point at which half the sale prices are above and half below.

"With a high price, the house stays on the market as buyers ignore it in favor of lowered-priced competitors. In an environment of falling prices, a house that sells three months from now is going to command a lower price than one that sells today."

"Houses that are priced right are selling," said Otteau. "Overpricing extends days on the market and guarantees that you will sell your home for less in a declining market."

"Otteau said pricing a house a little below the competition not only catches the buyer's interest - it also reassures them that they won't kick themselves later for overpaying if, as expected, home prices drift lower in 2008."

"Agents should aim to underprice the competition."

"You can't just try for a higher price because you really want it," he said. "The way to get a higher price is to create a sense of urgency by setting a lower price."

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