Good seller, bad seller.
Putting your home on the market really tests your knack for wheeling and dealing. Some sellers have it, and some only think they have it. Some are coachable, some not, and some don't seem to get any coaching.
To illustrate this, let's introduce two characters, Good Seller and Bad Seller. (Any resemblance to actual sellers, living or dead, is purely serendipitous.) Yes, I know, "good" and "bad" are such judgmental words—can't we give every seller an A++ and a pat on the head?—but it's a fact that some sellers do good and some do bad, hence Good Seller and Bad Seller. The Good Seller and Bad Seller we'll examine today live in the same city. In fact, they live in the same neighborhood. In fact, they live on the same street. In fact, they live two blocks from each other. So we're pretty sure they're selling in the same market.
Good Seller brings her home on the market at the fairly ambitious list price of X, which goes to show that even Good Seller has her dark side. Because X isn't a bad list price, but it isn't a good list price, and both Good Seller and Bad Seller are selling in a market where the list price has to be spectacular, with the Michigan State marching band, a few elephants and maybe an air show.
Not-bad is so not doing it for Good Seller, so after a week of no offers she drops her list price to a tantalizing Y. Almost certainly her agent suggests this; in fact, it may have been their strategy all along. Within days this concession to reality produces three offers and a sales price close to X. Proving that real estate is a price-sensitive market. Get the list price wrong, even by an inch, and buyers will scoff. Get the list price right, on the other hand, and you'll end up in contract and at top dollar.
Given this stark contrast in outcomes, why wouldn't every seller take pains to get the list price right? To answer this accurately and completely I'd have to do some scoffing of my own, this time at human nature, seller ego and agents who just want to be buddies, not necessarily in that order, and I don't feel like getting heavy this week (but check with me next week). So instead, I'll move on to the story of Bad Seller.
Bad Seller is, indirectly, my source for most of this handy how-(not)-to article. I can't divulge any details, except to say that we've breached his security. The other reason I'm so clued in is that at the very moment Good Seller's agent was selling Good Seller's home with three offers, I was spending three hours I didn't have slogging through Good Seller's disclosure package and writing an offer on Good Seller's home. Good Seller's agent knew this, because I'm a guy who communicates, but apparently Good Seller's agent isn't. So I'm invested in this.
Bad Seller isn't a Bad Person, but his wheeler-dealer instincts are a little suspect. His home is bigger and nicer than Good Seller's, so he brings it on at a lofty Z. Which would be okay, except that Bad Seller's home has a location problem we aren't rude enough to mention, other than to say that in truth Bad Seller's home isn't worth much more than Good Seller's. Either Bad Seller's agent doesn't know this, or Bad Seller's agent doesn't like giving his clients bad news, or Bad Seller isn't listening, or maybe Bad Seller's agent was too busy trying to steal my client at the open house to mention it.
So here's the scene: Bad Seller and Good Seller put their homes on the market the same day, and both address buyer indifference quickly by dropping their list price. So far, so good. But Good Seller is in contract and Bad Seller isn't. Bad Seller's explanation? Good Seller "had to sell". Bad Seller doesn't. Thus empowered, Bad Seller will not cave to market pressure. No, Bad Seller will stand with his arms folded waiting for the market to come to him. As he's slowly buried under the waves of new listings in his price range. And as his days on market creeps inexorably upward, proving beyond doubt to every buyer what he or she knows already, that Bad Seller's home is over-priced. The only question in buyers' minds will be, "What's wrong with that house?"
Nothing a friendly nod to reality won't fix.