Are Sellers Pushing Their Luck With Inflated Prices?

After the real estate market crashed in 2008, it was not uncommon for opportunistic buyers to offer prices 25 and 30 percent below asking. Now the tables have turned. Although the market is still fragile according to just about everyone, sellers have seen the uptick in sales and want a piece of it. More and more sellers are rejecting comps that they feel are inferior to their own properties, and some real estate agents out there are willing to play the game and list the properties at an inflated price. The problem is, they’re not getting any bites.

It’s true, the volume of sales is trending upward, but that’s common this time of year. While sellers are seeing market recovery, experts aren’t so sure. Jonathan Miller, President and CEO of appraisal firm Miller Samuel, put it this way. “It’s a consistent, stable market — not a booming market — certainly far better than it was a couple years ago, and the word for that is ‘rebound,’ not ‘recovery.’”

But what’s the harm in pricing high at the start? Well, a high asking price could cause your property to sit on the market longer. Statistics show that properties get the most activity in the first three weeks, and after that traffic drops sharply. When an apartment has been sitting on the market for a long period of time, suspicion grows that there is something wrong with it.

There are a lot of factors to be considered in pricing strategy, and one of the biggest is current comps. Projections that a building will appreciate in the next five years are just that–optimistic guesses–but nobody has a crystal ball. We all want to get the most out of our investments, but that only works if the buyers are willing to pay, and when they see other properties in the same building going for a lot less, they may skip touring yours altogether.

Source: The Real Deal

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