All over the country, home sellers are telling real estate agents, "I don't care what your analysis says my house is worth! I just want to test the market at a good bit more than that."
The next thing we hear them say is, "Listen, it just takes one!"
OK, that's not how it works.
You need something more than a hunch or a crystal ball to come up with the magic number that will attract offers on your home. You need an analysis that will give you a well-focused snapshot of what is happening in your building or neighborhood - right now.
Tonight, I am preparing a market analysis for some sellers in one of Washington's premier buildings, and I was totally struck by some of the numbers that I saw.
I looked at the eight units that have sold since the first of the year. The average sold price was $614,375. And the average list price was $666,625, only about 8 percent higher that what these units sold for. But the original price where the sellers tested the market was a whopping $806,375. This means the units that sold went for an average of 24% less than the optimistic "test" price. And every single one of these sellers had to negotiate with buyers who wound up getting their units for less, sometimes much less, than the sellers were asking.
During the same time, 21 sellers took their units off the market altogether, and 11 of those had had no price reduction at the time they withdrew from the market.
The MRIS statistics do not, of course, tell the entire story. They don't show whether or not any of these sellers attracted offers that they declined to accept. They don't tell us whose idea the price was to begin with. It might have been sellers trying to test the market, or it might have been over optimistic listing agents.
Either way, I think it's important for sellers to expect a carefully prepared analysis of what is going on in the local market as part of coming up with that magic number - the one that will at least attract buyers who want to make offers on the house or apartment.
And remember -
You don't test the market
The market tests you!
And if you price your home too high to attract offers, the market will flunk you! Yep! A big ole "F".
When your market speaks to you, it could care less what you paid for the property, how much you improved it, or what you need to buy your next place.
Yeah, that old market can be just ruthless!