Often I hear from a Seller: “Just tell the Buyer to make an offer.” And that seems so simple, so why don’t they? I believe it is because Buyers have good manners. Buyers don’t want to offend or hurt the feelings of a Seller by making an offer that could be considered “low ball” or “bottom feeding”. So instead, in my experience the Buyers wait until the price is within the range of what the Buyer has determined to be the market price.
In a rising market, Sellers can overcome the possibility of overpricing because the market is moving towards them. When demand is great, Buyers have less choice, basic supply and demand fundamentals say that it is a time of rising prices. When supply is great and buyers have lots of choice, then there is price pressure down.
I have come to firmly believe that the market is a very efficient mechanism because it is the collective wisdom of countless independent people evaluating the market conditions. When people say “this time is different,” that is when one should proceed with caution as it is more than likely from a subjective frame of reference and oftentimes a means of justifying one’s own point of view.
Notice that I haven’t even addressed what is being sold and what the buyers are purchasing. Let’s apply the “good manners” phenomenon to my area of expertise, upper bracket homes and real estate in Northern Virginia. When I hear “my home is different” or “my situation is different”, or “my property is unique” it is my opportunity and duty as a professional, full-time active Realtor® to explain that the market is not subjective. This is the basis for the reasoning that attorneys shouldn’t represent themselves and medical professionals shouldn’t practice on family members. It is difficult to remain objective when one is too close to the situation.
I heard internationally acclaimed personal finance expert Susie Orman speak and she shared this wisdom: Calculating the price you “could have had” is a dream. The biggest mistake people make is getting greedy. Even in a rising market, I see Sellers have expectations that are unrealistic. It is better to have 80% of something than 100% of nothing. This reminds me of an old southern saying my business partner, Sue Huckaby, used to share: “pigs get fat, but hogs get slaughtered.”
How do Sellers know whether they are priced at market? I believe that if a Purchaser in the residential real estate market hasn’t made an offer within 30 days, and for certain by 60 days, then the market is speaking to the Sellers and in effect is saying the price is greater than 10% of what the market perceives the value to be. At that time my professional experience has found that a Seller should adjust the price by preferably 10%, but at least by 5%. If after another 30 to 60 days the Buyers still have too good of manners and no one has made an offer, then the Seller should follow this procedure until the market price is found.
Karen Briscoe and Lizzy Conroy are active and experienced professional Realtors® in the Northern Virginia, Washington DC and suburban Maryland market place and would be delighted to assist with this process for you, whether it is home buying and/or selling. Please contact via the means most convenient for you: www.HBCGroupKW.com, 703-734-0192, Homes@HBCGroupKW.com.