Q: My home has been on the market for almost a year. My Realtor also sold it to me and also sold my last two homes, and does a lot of sales in my neighborhood. She told me to list it at $599,000, but I really couldn’t afford to eat that much of a loss, so I had it listed at $699,000.
Anyhow, I keep reading about how the market is rebounding now. I see other homes getting multiple offers in a fairly short period of time, and I’ve got nothing. I know my agent spent a lot of money advertising the place, but I’m tired of having conflict with her. So, I just asked my Realtor to cancel the listing and relisted it with another agent who wouldn’t take the listing priced any higher than $599,000. What did I do wrong, here?
A: Your note was short, but my list of mistakes you made is long. Do me a favor: Stop reading now if you’re thin-skinned.
Mistake No. 1: You seem to have been very confused about how to set a list price for a property. A smart seller in a buyer’s market sets the list price by looking at the most similar homes sold recently in the area, and then going slightly lower than that — 10 percent lower is a decent rule of thumb. Low pricing attracts buyers, and more buyers means more offers. The list price of your home is not wisely set based totally on what you can or can’t afford.
Mistake No. 2: You found and retained a real estate professional who you knew and trusted. Then, you totally and completely ignored her expertise and pricing recommendations, which she gave based on her track record of success in your local market and in the current market dynamics. And you didn’t stop there — when your home sat on the market for a year, while she was spending her money to market your home, you fired her. Oh, yeah — and then you did exactly what she’d been telling you to do for a year — you finally priced the place right.
Mistake No. 3: You selectively interpreted the market data. You heard that sales were picking up, and you got wind of multiple offers, so you took that to mean that something was wrong with your agent. However, you ignored the other critical half of the "Home Sales Are Up" headline: that sales are up largely because prices are down, which has created opportunities for first-time buyers. The homes that get multiple offers are the ones that are in great shape, well located and priced well. If you applied only half the news story to your own situation, and didn’t look for the causes of the uptick in sales to try to apply that to your home’s listing, that was definitely a mistake. …CONTINUED
Mistake No. 4: Did you go look at your competition — the homes you’re seeing come on and off the market with multiple offers — when they held open houses? If not, that was a mistake. You’d be amazed at the investment of time and strategy that goes into staging and preparing the homes that do sell in today’s market. Also, did you analyze their pricing strategy and try to put yourself in the shoes of the prospective buyers that would be seeing both your property and theirs? No? Big mistake.
Mistake No. 5: Finally, it took you entirely too long to correct pricing. Most listing agents who are having success in today’s marketplace will take a slightly overpriced listing (which your house was not — I’d call yours significantly overpriced) only on the condition that the seller agree upfront that if the listing gets no bites within 30 days, the price will be reduced. You exposed your list price to the market for 12 times that amount of time — a full year — with no bites, and failed to learn the lesson the market was delivering.
Your refusal to accept this market education has been to your detriment. At this point, your home has been on the market so long, any smart buyer will see it as damaged goods or wonder what’s wrong with it. Even more likely, they’ll wonder what’s wrong with you. Either way, you might have set yourself up for a lowball-worthy situation, especially since many multiple listing services now show not only the number of days your home has been on the market in the current listing, but the cumulative number of days on the market without more than a 60- or 90-day break between listings.
Of course you’ve heard that pride goes before the fall. When you last heard the old saying, though, you likely didn’t realize that the fall referred to was the fall in the sale price of your home.
You might earn some karmic points back onto your side of the cosmic balance sheet by calling up your old agent and acknowledging that you were wrong. Whether you do that or not, though, get real about what it will take to get your place sold, and get on with your life.
Tara-Nicholle Nelson is author of "The Savvy Woman’s Homebuying Handbook" and "Trillion Dollar Women: Use Your Power to Make Buying and Remodeling Decisions." Ask her a real estate question online or visit her Web site, www.rethinkrealestate.com.
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