The type of transaction (traditional, short sale or foreclosure) helps determine how a home should be priced. Below is a brief synopsis of the different approaches that, if not followed, could have costly results.
- Traditional sale in a strong seller’s market: Between 2000 and 2005, many sellers did not reap the benefits of a strong housing market because they overpriced their homes. Buyers who were already discouraged by losing home after home, would refuse to visit or put in an offer for an overpriced home. Conversely, sellers who priced their home just under market value were able to get numberous offers and sell their properties for as much as the market would bear. Many of these sellers enjoyed the benefit of not having to negotiate with the buyer during the inspection period (assuming the buyers didn’t waive the inspection to beat out the other buyers).
- Traditional sale in a strong buyer’s market: Between 2006 and 2010, many homes were steadily losing value. By pricing a home too high and not being able to compete with more competitively priced homes, some sellers found themselves chasing the market down and each time they lowered the price they were still above the market for their home PLUS their home’s days on market were accumulating. In a buyer’s market, correct and quick adjustments must be made if a home is overpriced. Price correctly and adjust frequently (as necessary).
- From past experience, and from training as a Certified Distressed Property Expert, we can advise that if you are considering a short sale, you will want to overprice your property and, at regular intervals, reduce the price until you’re at or just below market value. Call us to discuss this strategy in more detail.
- We have assisted many clients in buying foreclosures, which are properties owned by the bank. We often get asked how these types of properties are priced. While banks would like to sell these assets for as much as possible, their main objective is to get them off their books. Foreclosed properties are almost always vacant which attracts disrepair, mold, squatters and more, and banks realize this. They are very likely to price them well and bring the price down at regular intervals, and attempt to close on them in 1-3 months.