going beyond list prices

The other day I did a piece called going beyond ‘the comps’, where I talked about why ‘comps’, the lists of comparable home sales, are relied on, by buyers, much less today than they were in the past.

And it occurred to me that the same is true for list prices.

There was a time, before the boom and bust, when list prices were a  reasonable guide to what a seller would accept and a buyer would, therefore, pay for a home. Today, that’s no longer the case. List prices are routinely ignored or laughed at or worse.
And, ironically, it is the would-be sellers of overpriced homes who have taught buyers to ignore list prices. 

And how did they manage that. Simple, by overpricing their homes.
And of course those overpriced homes don’t sell. That is, until they either come way down in price or, after many moons on the market, a worn out seller finally throws in the towel and grudgingly accepts a
so-called low ball offer. Or eventually, mr. lender takes them back.  And then they routinely sell for 20 – 40%, or more, less than their original list price. And that’s been happening day in and day out for a few years now. And so buyers have learned, as they should, to ignore list prices.

And from that simple lesson and other adventures in researching and buying a home, buyers are, at best, skeptical and leery.

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Comments

[john schneider]

Stuart, there's probably plenty of blame to go around. But I also think, as I pointed out the other day, that sellers just rely on the comps provided by listing agents to help them arrive at a list price for their home. Period. They don't put in the time and effort to know what's really going on and have a handle on how their home should be priced. And some of them end up with a good agent who knows what he/she is doing and some of them end up with their brother in laws 3rd cousins son - who is smart as a whip and a real go-getter. But has never set foot in the foothills.
JS

[Stuart Pikert]

very true, John...but as the expression goes...which comes first the chicken or the egg?

Does the seller set the pricing, or does he/she look to the broker for an analysis and recommendation at what price to set?

I wonder if some agents, in order to get the business set up prices above what is realistic to entice the seller to use his services.

Sellers, of course, being human, desire to get the top dollar for their "wonderful" home that is, of course, in "perfect" condition. When promised the moon they may jump at the chance...only to see their home sit for months on end with no bids coming close to their asking price.

You, being in the field would have a better knowledge of how much of this goes on...but if I were a broker i would always give a prospective seller a realistic appraisal to start with...and if i lose him to another broker who tells the seller "oh, i can get you a much higher number for your home"...so be it.

Maybe the sales managers at Long Realty and the others brokerage firms should sit down with their agents and discuss that to put unrealistic prices on these homes is a waste of everyone's time...the buyers..the sellers...and, of course, the agent who has to show the home for months on end.