Different homes need to be handled differently. Depending on the market, if it’s a short sale, foreclosure or traditional sale there are basic different methods to proceed. This is a brief outline of the different approaches that, if not followed will have costly results.
- Traditional sale in a strong seller’s market: Between 2000 and 2005 I saw many sellers (not my clients) ruin a great housing market for themselves by overpricing their home. Buyers who were already discouraged by losing home after home would refuse to visit or put in an offer for an overpriced home. Conversely, a seller who priced his home just under the market value was able to get numerous offers and sell his property for as much as the market would bear. Many of these sellers enjoyed the benefit of not having to negotiate with the buyer during the inspection period (assuming the buyers didn’t waive the inspection to beat out the other buyers).
- Traditional sale in a strong buyer’s market: Between 2006 and 2010 many homes were steadily losing value. By pricing a home too high and not being able to compete with more competitively priced homes, some sellers found themselves chasing the market down and each time they lowered the price they were still above the market for their home PLUS their home’s days on market were accumulating. In a buyer’s market, correct and quick adjustments must be made if a home is overpriced. Price correctly and adjust frequently (as necessary).
- If a home is a short sale, I can tell you as a Certified Distressed Property Expert, it’s very important to clearly overprice the property and, at regular intervals, reduce the price until you’re at or just below market value. Why would we do this? So you can go to the bank asking for an approval with a price reduction history in hand. The short sale negotiator (employee of the bank who makes the decision on this) will have a much easier job approving the short sale if he can see that the property did not sell at the higher prices. If you correctly price the home on day one and get an offer that you ratify and send to the bank, how will you explain it to someone across the country that you happened to price it just right? Meanwhile, the negotiator has countered your buyer (who is already apprehensive about getting involved with a short sale) at 50k higher to see if the market would bear this price. This is simply poor planning and too risky. 1-5 months later these sellers find that this deal didn’t work out and are that much closer to a foreclosure themselves and back to square one looking for a new buyer and running out of time.
- A foreclosure is a property owned by the bank. While they would like to sell this asset for as much as possible, their main objective is to get it off their books. It is almost always vacant which attracts disrepair, mold, squatters and more and they realize this. They are very likely to price it well and bring the price down at regular intervals and attempt to close it in 1-3 months. I include this section for you, as an individual owning a property for your information and do not assume a bank employee is reading this and learning how to price a property. My team and I have listed and sold hundreds of foreclosures.
