Sellers often wonder why buyers don't make an offer on their nice homes. They find it hard to believe the source of the problem is the list price is too high.
It's a sellers market in Los Altos. You list your home with a good Realtor, put up a sign, advertise it and it should sell immediately, maybe with multiple offers.
"Overpriced properties don't sell in any market, even a sellers market," Coldwell Banker's Mickey Shaevitz said. "In my 10 years as a real estate professional, representing both buyers and sellers, one fact is true. The list price of a home determines the number of days that property will be on the market. And the list prices does not determine the sale price."
Sellers often think that if buyers love their home enough, they'll pay more, which is true when a buyer has a serious interest in the property.
But few buyers are willing to pay more than the fair market price. A home is only worth what the market will bear, not what the seller wants.
Shaevitz said buyers determine the sale price. Value has nothing to do with what a seller financially "needs" to get from the sale, what the seller paid for it, or the amount of money spent on improvements.
Within the past month, Shaevitz sold two properties in Los Altos Hills for over a million dollars that illustrate the relationship between pricing and length of time on the market.
There was no urgency to sell the first house. The seller wanted to test the market in the higher price range.
They received no offers. At a previously agreed upon time, the price was reduced to the lower end of the range. It sold within a week, almost at full price.
The seller of the second house had a great sense of urgency. The property was priced accordingly and multiple offers were received in less than 24 hours. It sold for over list price.
"There is a lesson here," Shaevitz said. "Sometimes a higher price will result in a lower sale price than a lower list price, which will produce multiple offers and sell for more than the list price."
Sellers who put an unrealistic price on their home send a message to prospective buyers that they may be difficult to work with. Home buyers today are busy and don't have the time to waste with unreasonable sellers. This is why most buyers would rather wait for a price reduction before starting to negotiate.
"Realtors don't direct their buyers away from overpriced homes," Shaevitz said. "These homes often help sell their competition and are shown as a comparison to other listings that are thought to be better value."
A home is most marketable when it's new on the market. If it doesn't sell within the first month or so, agents and their buyers lose interest. "Putting the appropriate price on a home is not an exact science," Shaevitz said. "Real estate professionals know how to analyze available data to determine the correct price range. Remember, overpriced homes do not sell in any market."
Shaevitz is a member of Peninsula West Valley Association of Realtors and is director of its Los Altos district.