Why buyers do not make offers on over-priced listings
|When sellers wonder why they have not received an offer on their home, they should first look at the asking price - it's probably too high. But, "buyers can always make an offer, right?" Of course they can, but serious buyers usually don't make an offer on a home that's priced too high.
When the inventory of homes for sale is high, it's easy to understand why buyers do not waste their time on a property that is priced above the competition. However, an over-priced listing may not attract an offer even in a low-inventory market - how come? The answer is that buying and selling a home is an emotional experience and psychology comes into play. Some buyers shy away from making a low offer on a listing because they don't want to offend the sellers. This is particularly true if the buyers have a serious interest in the property. They often prefer to wait for a price reduction before making an offer on an over-priced listing.
Sellers often think that if buyers like their home enough, they'll pay more for it. The truth is that a home is worth a certain price, which may not necessarily be the price the sellers want. Buyers know the market value better than sellers. While sellers may look at a few houses before putting theirs on the market, buyers look at dozens of homes. By the time they decide to make an offer on one, they have a good idea about housing prices. It's almost impossible to convince today's cost-conscious, consumer-savvy buyers to pay more than the fair market price for a home.
Sellers who put an unrealistic price on their home send a message to real estate agents and to prospective buyers: Here are impractical sellers who may be hard to work with. Like all of us today, home buyers are busy people who don't want to waste time with unreasonable sellers. Most would rather wait for a price reduction before starting to negotiate on a home they really love.
MORE HINTS: When sellers discover their home is priced too high, they should reduce the price immediately. A home is most marketable when it is new on the market. If it doesn't sell within the first month or so, agents and buyers lose interest. Sellers may be reluctant to drop their asking price. But, keeping it on the market at an unrealistic price can result in a lower selling price when it ultimately does sell. If sellers lower the price when the listing is relatively new, they have a good chance to keep the marketing momentum going.
New listings stay fresh in real estate agents' minds for only the first few weeks they're on the market. That's why it makes sense to lower the price on an over-priced listing early in the marketing period. After a listing has been around for a few months, a price reduction will not have the same impact because many agents have already forgotten about the property.
Buyers don't like to make an offer on an over-priced listing and real estate agents don't like to show them. Put yourself in the agent's shoes. If you're working with well-qualified, motivated buyers who only want to see well-priced homes that suit their needs, why would you risk losing credibility by taking them to see an over-priced property?
Click here to view more Seller Reports.