In any real estate market, price is the absolute key. It's just not as important in an increasing (seller's) market than in a declining (buyer's) market.
In a seller's market, if you miss the target, (market price), the seller can always wait for the market to catch up to their price.
Most markets around the country are currently in a buyer's market.
In a Buyer's market, if you miss the target, not only will the house not sell, the seller will get angry and frustrated, the agent will feel helpless and worthless, and the home will lose value daily. Even in a Buyer's market, with average 75 days on the market, if a home hasn't sold in the first 21 days, the seller has lost their "honeymoon period." That is the time where the limited number of buyers that are out there, looking for the right home at the right price, would have bought the house if it was priced right. After 21 days, the house loses the "new kid on the block" advantage.
In a buyers market, the seller has to price their home at tomorrow's market price, not yesterday's. If prices are falling 5 percent a year, then a $500,000 property today will be worth $498,000 next month and by the end of a typical escrow, $495,000. A seller needs to price the house at $495,000 today so they can be the next home to sell, before values go down again.
A price adjustment must begin the day the listing is signed. A properly informed seller should be primed for a price reduction the day they list and and should be kept informed of the market weekly.
Pricing is an art, not a science. Your Realtor suggested price is an opinion, only the current buyers out there looking will tell them if the price is right.
As a rule of thumb, if after the first 21 days, the home had a lot of showings, but no offers, the price is probably within 5 percent of market. But, if after 21 days there are very few, or no lookers, the price is likely at least 10 percent over market, or more (There are exceptions). Most buyers are willing to offer 5 percent under the asking price and not be afraid of offending the seller, but very few buyers will offer 10 percent, or more, under the asking price. The buyers, and their agents, will simply refuse to even look at a property that is 10 percent or more over priced. And agents remove it from their radar immediately.
So if you are thinking of selling, make sure your realtor provides you with a detailed market comparison of all recent activity and that includes price reductions. In Fairfield County, CT? Call me, Victoria Lorusso for personal no obligation report. 203-324-9600 or visit my web site at http://www.HomesofFairfieldCounty.com
