The Four Letter Word of Real Estate

16/07/2007

The word of the day is, "Price Reduction". Awe yes, price reduction, the four-letter word of real estate. The words Realtors hate to utter and make Sellers shutter.

Why is it that price reductions get such a bad rap?

Well, from the Realtors perspective, it means he failed in one of two ways. He either didn't communicate the correct market price of the property effectively to the Seller. OR His interpretation of the market, as it relates to this particular property, was incorrect. In either scenario, it's not a nice phone call to make to your Seller. But, we're only human and sometimes we make mistakes.

To the Realtors of the world, I say, "Make the call, get the price reduced and get the home sold for your Seller" (it's what they hired you to do). The alternative is, not making the tough phone call and allowing your competition to pick up the listing at the right price after your listing expires and ultimately getting the home sold, without you.

Sellers, why do you have such a hard time reducing your price?

I know - I know, believe me I've heard it all before, "So and so down the street, got "X" amount of dollars and he didn't even have the heavy duty nail package in his house - my place has got to be worth way more than his." Or how about this one, "My friend at work said that his neighbor got $5,000.00 more than he wanted." And then there's always the good ol', "Everyone that comes into this house says how beautiful it is and that I should have no problem getting what I want."

With all due respect - We all have a warped sense of how wonderful our homes are (myself included). The guy down the street may not have the heavy duty nail package, but he may have had, just what the buyer was looking for, and extra 300 square feet. As for the words that come out of your friends and co-workers mouths - they really have zero to do with the current market value of your home and should be disregarded immediately. I know that sounds harsh, but if you really need your home sold due to a job transfer, a marriage separation, financial reasons or you simply want to move to that new castle you and your honey have your eye on - don't allow your judgement to be clouded by emotional words of inexperience. Request and expect your Realtor to level with you and trust the experienced words of a professional.

You know, I had my home listed 10% too high before I got the advice of some objective, experienced professionals. Once I came back to reality, my home sold in two weeks for almost 97% of my asking. Believe me, it's human nature to place greater value on your own possessions than the market is willing to bear.

Now, why have I been harping on you about price reductions, today? Well, Ladies and Gentleman, it is summer and low season is about to be upon us.

Market values move up and down largely due to supply and demand. Traditionally, market activity slows by the second week of July as the "Get moved before school starts", crowd, has already made their purchases and are now in the process of packing and moving. You can see how this annual situation can take the wind out of the market's sail.

With lower buyer activity about to descend upon us, prices will begin to weaken. Now please don't misunderstand, I am not predicting a melt down of prices. But if your home has been on the market for more than 60 days in the hottest market ever and it is still not sold, I think you had better take a long hard look at your asking price. There is a very good chance that it is too high. And if you want to move before Christmas, now would be a great time to use the four-letter word of real estate - REDUCTION!.

I know it's not a nice pill to swallow and you probably are looking at it as lost money. But if your home is not worth the money you are asking, you never had that money to begin with. It's only the idea of the money you are losing. All I can say is get over it and get on with the sale of your home. Or take it off the market and wait and see if better times are ahead. Perhaps a call to your Realtor and a reevaluation in a brutally honest light will be in order. Either way you need the facts to make your decision.

Till next month, this is Rob Thompson saying, "Good Luck and Good Selling!"

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