Gosh, I wish more economists talked so clearly about how to sell your home.
Well, if you are holding out for an above-market price to recoup your losses, perhaps you would do well to hear the advice that Professor Mayer gives his own family members.
“If you want to sell your house then you list it at the market price and you sell it,” he said. “If you don’t really want to sell then don’t put it on the market. But don’t say you want to sell and then set the price so high that you spend the year cleaning up every morning, having people walk through your living room and look in your medicine cabinets and reject you. That’s just painful — and expensive.”
And very expensive for your real estate agent too!
Hat tip Russell Shaw at Bloodhound Blog.
ADDED: Here’s a comment on that same article from the Edmonton Real Estate Blog
Isn’t it funny how fast home owners in Edmonton went from saying “I can’t believe my home is worth $XXX!!!” to “I won’t take a penny less than $XXX!”
From “My neighbour just sold their house for $500,000!!! I can’t imagine anyone ever paying that for my home!” to “My neighbour sold their house for $500,000 in July so mine must be worth $550,000.”
From “I would never pay $400,000 to live in this house of mine!” to “My house is worth at least $400,000!”
4 responses so far ↓
1 Ken44 // Oct 7, 2007 at 7:39 am
Why are RE agents taking on properties they know will not sell in this current market? Or do agents simply list such homes and forget about them? If they sell great but they aren’t going to spend much time with properties they know they can`t move?
Also about what % of homes would you guess are listed by sellers not worried if their home doesn’t sell?
I ask because the inventory is huge and homes are simply sitting. Yet prices in many parts of the Phx metro have yet to fall much below the peak of 2005.
2 John Wake - Realtor // Oct 7, 2007 at 1:20 pm
I think there are a lot of pretend sellers out there but I don’t have a feel for he percentage.
If they can get “their price” they’ll sell, otherwise they won’t. The vast majority of time “their price” is above the market price.
Why to real estate agents take overpriced listings? Good question.
The agent may not know it’s way overpriced, he just asked the seller what the seller wanted to sell it for.
Even if the agent knows it’s way overpriced, he may be banking on the seller reducing the price to market price before the listing agreement expires.
Overpriced listings tend to attract agents who do the 3 P’s of selling - 1) Put up a sign, 2) Put it in the MLS, and 3) Pray it sells.
If the home doesn’t sell, it’s no big loss for the agent because he didn’t put much time or effort into marketing the home.
My real estate marketing techniques are very expensive. I don’t know anyone who spends as much time and money - cash out of my own pocket - to market a client’s listing.
Agents who put a lot of time and cash behind their real estate marketing have to decline overpriced listings because the agent will take a big financial hit if the listing expires unsold just because it’s overpriced.
If a seller wants to overprice his home, he will tend to end up with agents who do the minimum. This minimizes the agent’s losses if the seller keeps an unrealistic price and the listing expires unsold.
3 Russ // Oct 8, 2007 at 11:08 pm
“I ask because the inventory is huge and homes are simply sitting. Yet prices in many parts of the Phx metro have yet to fall much below the peak of 2005.”
The houses in most neighborhoods in Metro Phoenix that actually sell are selling for substantially less than the 2005 peak for comparable houses. If an area or subdivision has ample inventory and little sales activity, then the market prices are clearly lower than the list prices. The notion that anything close to 2005 peak prices will survive this period of minimal transactions is unrealistic. Adjusted for inflation, I do not think that those absurd price levels will return in the next fifty years.
I think that the idea of some testing the market on the MLS is happening to some degree. I would say that testers are asking “too much” for their house(s) because they simply lack the funds to make-up for the fact that they overpaid and/or overborrowed. Sure, one can always point to a few exceptions that prove the rule. But even those who do not owe 130% of the market price of their house(s) probably spent more money than they otherwise would have because of the price boom. Retired their car a couple of years early, etc.
4 Arizona Real Estate Blog » A Reality Check for Home Sellers // Oct 18, 2007 at 11:35 pm
[…] Jonathan Dalton wrote an interesting post today onHere’s a quick excerpt… having people walk through your living room and look in your medicine cabinets and reject you. That’s just painful — and expensive.” And very expensive for your real estate agent too. Hat tip Russell Shaw at Bloodhound Blog. […]
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