The risk in asking too much for your house
If you're trying to sell your house and you figure your asking price doesn't matter all that much, consider this anecdote from Wonk reader elweedz.
A home originally listed at $525,000 sold almost a year later for $350,000, less than what he might have been willing to pay for it. "Since I thought the home was so overpriced ... I never bothered to go see it," he commented. So the owners lost out on a showing and a possible offer that could have been better than what they got.
"Realtors (and I know you are out there reading this blog) should print this and show it to their customers," he added.
Sometimes, too-high asking prices keep owners from getting any offers at all. But elweedz's experience shows how some homes end up selling for less than the owners could have received had they started off with a lower asking price to begin with.
I know it can seem counterintuitive, especially to a seller who is trying to account for the possibility of lower offers from buyers by making the asking price 10 percent higher than he would actually take. But in a market where sale prices are dropping and lots of listings are jostling for attention, pricing too high really hurts sellers.
Plenty of buyers will snort at the asking price and click on the next listing, rather than coming out to look and making a much lower offer the owner might have been willing to take. And some folks who would have been ideal prospective buyers won't even see the online listing information because it's in the wrong price category.
Here's a question I'd like to have buyers, sellers, real estate agents and general housing-market observers alike tackle: Have you ever seen a situation where a house is languishing on the market but the asking price is not the primary problem? In other words, lowering the price wouldn't make a difference?