Ultimately, it’s a seller’s decision how to price their home. The listing agents can advise the sellers on what they think is the best possible price but that doesn’t mean they need to take the advice. I’ve walked away from working with sellers when I thought their price was too high. I’ve seen other Realtors come in and try the seller’s price, then spend months struggling to get them to reduce. In one such case not too long ago the listing expired, then came back on the market a six months later and the seller eventually ended up getting $125,000 less than her original price. If she had taken my advice when I spoke to her before her first unsuccessful foray on the market, I’m confident she would have sold quickly and netted $75,000+ over where she ended up. And she would not have had to deal with the months of mental anguish that can afflict a seller when they aren’t getting their price.
Pricing homes is more of an art than a science. The owners of the art understandably love and appreciate their homes more than anyone. That’s why sellers can be inclined to put a value on their homes that the market does not support. Sometimes I hear from sellers that they just want to ‘test the market’ at a higher price, and if they don’t get their price, they’ll either stay put or rent out the house. Over the years I’ve seen lots of agents test higher than market pricing, only to end up with a cancelled listing. Sometimes homes come back the following year and finally get their price. Other times they end up cancelling again.
There’s an old saying in real estate sales, “Sometimes it’s best to be the second or third agent.”
In a hot market, eventually the pricing will catch up to the seller’s expectations, unless of course the seller’s expectations keep rising along with the market. I recently spoke to someone who tried to sell her house last year and failed. This year she wanted to try pricing it $100,000 above where she last had it on the market. I referred her to another agent with a warning that she was likely unrealistic. They worked together for a day before he ended up walking away too.
Realtors aren’t always right when they price a home. The good news is when they price a home too low, buyers most often bid the house up to the market value. Buyers need to act quickly, and they have to wonder how much over the asking price they’ll need to pay. The opposite is true if a house is overpriced. It will sit, and it isn’t long before buyers start wondering how much less the seller will take. It can get ugly.
I’ve worked with sellers during slower markets and we haven’t gotten our price right out of the gate, but we ended up getting the price after a few weeks. In once instance we accepted an offer from a buyer who tried to renegotiate the price after their inspections. My sellers refused and I was certain they didn’t need to come down on their price. The other agent told me I’d never get the asking price. We cancelled the escrow, and a week later we got our asking price. I don’t know if his buyers ever found another house.
I’ve been selling real estate full time since 2004. I’ve got a master’s degree in business administration. With my experience and education, I feel like I’ve got a pretty good idea of where most homes should be priced. If a seller is too high, I’ll talk to them about their willingness to entertain a reduction strategy. If they aren’t open to reducing the price in the event the house starts to get stale, and I think the price is out of the ballpark, that’s a game I pass on every time.