PRICING RIGHT IS THE KEY - Especially In This Market!
TOO-HIGH ASKING PRICE USUALLY REDUCES EVENTUAL SALES PRICE!
Here in Chicago, if we run into this once, we've run into it one thousand times from home sellers -
"Let's try a higher price to start with when we sell. We can always come down later," confidently-state many home sellers. "Besides, we need plenty of NEGOTIATING ROOM, right?"
Not necessarily, especially in the currently-sluggish Chicago Real Estate Market!
When the market was strong, and average sales prices increased on a monthly basis, pricing higher-than-market merely increased the market time for many homes. Instead of a 2-week sale, many somewhat overpriced houses sold in 30 days or so. Even when a home didn't sell at the initial asking price, often a slight price adjustment was all that was needed to trigger a solid offer.
Today, with inventory levels exceeding two-years supply in many Chicago Neighborhoods and suburbs, pricing too high can cost a lot of money. Indeed, homes with several price reductions often take longer to sell, and may sell at a lower price in the long run.
James R. Knight, a Real Estate Professor at The University of The Pacific in California, cited a late-1990's survey in Stockton CA. The study showed homes with several price reductions took longer, on average, to sell. Once they did go under contract, the average sales price was 9% less than those priced correctly from the start. Continued Knight, "This was during a time when the market was stable; I suspect there would be bigger drops now."
Here in Chicago, one agent from Rubloff Residential Properties explains the internet, and its "Saved Home Search" function, similar to the one found on our Dean's Team Web Center, automatically feeds new listings in a buyer's price point each day via email. Overpriced homes stick out like a sore thumb - or are missed completely by prospective buyers because their maximum price point - the realistic price for the new home - is greatly exceeded.
Our Team has also found that overpriced homes may actually help sell right-priced properties! Many searching a particular Chicago Neighborhood or suburb actually schedule an appointment to view the new, too-high home listing. They quickly dismiss it, feeling they can pick from their choice of market-priced homes in the same area.
See Marilyn Kennedy Melia's further comments in her article in last Sunday's Chicago Tribune.
DEAN MOSS & DEAN'S TEAM CHICAGO
