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Capella’s Open House thread (1 Viewer)

First visitors in, an hour before scheduled so they must have been driving around. Seemed to like and asked some questions. I don’t know what’s good or bad. :shrug:  

 
Home sellers seem to think, what's the harm in starting out high? We can always lower the price after a few weeks if there's no action, right? Let's look at this scenario...

Home A and home B are essentially the same house. They are near exact comps and virtually the same in terms of the aspects that matter most in valuation. Same size, same level of upgrades and finishes, same neighborhood. The market is neutral, not overheated and not stagnant.

Sellers of both homes A and B are shown their comps and see that homes like theirs are topping out at about 400K.

Seller A sees their home isn't magical or special and knows that buyers have choices so he decides to price his home at 400K where the market has shown is its peak value.

Seller B listed his home for sale 2 months ago at 425K and still hasn't sold. He saw the comps showing the highest similar homes have sold for is 400K but he thinks buyers will magically pay more for his. And if not, he'll surely get the 400K he deserves once he drops his price to that spot. It's only his time lost if it takes longer to sell, right? But this way he didn't miss out on the chance to sell for more.

Which brings us to today...

Seller A is listing today at 400K (day 1 on market)

Seller B is lowering his price today to 400K (day 60 on the market)

Both are priced where the market says they should be and they're equal houses in every way. Who's going to get 400K (if not more)? And who is destined to get 390K if not lower? And why?

 
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Mr Anonymous said:
Home sellers seem to think, what's the harm in starting out high? We can always lower the price after a few weeks if there's no action, right? Let's look at this scenario...

Home A and home B are essentially the same house. They are near exact comps and virtually the same in terms of the aspects that matter most in valuation. Same size, same level of upgrades and finishes, same neighborhood. The market is neutral, not overheated and not stagnant.

Sellers of both homes A and B are shown their comps and see that homes like theirs are topping out at about 400K.

Seller A sees their home isn't magical or special and knows that buyers have choices so he decides to price his home at 400K where the market has shown is its peak value.

Seller B listed his home for sale 2 months ago at 425K and still hasn't sold. He saw the comps showing the highest similar homes have sold for is 400K but he thinks buyers will magically pay more for his. And if not, he'll surely get the 400K he deserves once he drops his price to that spot. It's only his time lost if it takes longer to sell, right? But this way he didn't miss out on the chance to sell for more.

Which brings us to today...

Seller A is listing today at 400K (day 1 on market)

Seller B is lowering his price today to 400K (day 60 on the market)

Both are priced where the market says they should be and they're equal houses in every way. Who's going to get 400K (if not more)? And who is destined to get 390K if not lower? And why?
Click to expand...
By far the worst mistake a seller can do is to list the price too high to start.

On the above, the buyer pool will now think there is something wrong with the house that's been on 60 days and will almost always, the newer listing will sell first.

Sellers that over price to start wind up getting less than market value almost every time as they miss their maximum buyers pool.  The vast majority of people that view a home use to be the first 21 days. I'll argue it's the first week now with 99% viewing it first on mobile apps.

When I price mine right at market, or even below $5k, you can often get multiple offers that drive the price up over what you asked for it.  Had one two months ago. Market was $199.  Listed at 195.  Sold for 204 in one day.  Home was 18 months old.

 
Last edited by a moderator:
Getzlaf15 said:
By far the worst mistake a seller can do is to list the price too high to start.

On the above, the buyer pool will now think there is something wrong with the house that's been on 60 days and will almost always, the newer listing will sell first.

Sellers that over price to start wind up getting less than market value almost every time as they miss their maximum buyers pool.  The vast majority of people that view a home use to be the first 21 days. I'll argue it's the first week now with 99% viewing it first on mobile apps.

When I price mine right at market, or even below $5k, you can often get multiple offers that drive the price up over what you asked for it.  Had one two months ago. Market was $199.  Listed at 195.  Sold for 204 in one day.  Home was 18 months old.
Click to expand...
You nailed it. Buyers are discounting a home as early as one week on market. The seller who prices appropriately from the start should be able to get list price and likely and higher if multiple buyers enter the fray. And in week one it's much easier to convince buyer's agents that others are just as interested as their buyer. It will be impossible to convince buyers that there is competition for home B in the above scenario at 60 days on market. It's pretty easy to tell there's no competition in as little as 14 days on market. Even if there's nothing aesthetically wrong about the house, there is no fear of competition for buyers after the house has been sitting for a few weeks.

 
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So going back to seller B and his mindset that when he gets down to the 400K where he should have been at from the start, "it's only his time lost".

WRONG. Seller B has now lost all leverage. No one is going to believe home B is suddenly in high demand, even if now priced appropriately. And web traffic on a home with a price reduction is a fraction of that on a new listing. The vast majority of people who saw and dismissed the house at 425K, will not even see the home now that it's at 400K. Even if they do, they'll know there's no reason to the offer the current list price (400K) anymore.

 
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