“You still see the hope in their eyes.”
When Atlanta-based real estate agent Maura Neill agreed to sell a home this fall, she knew she faced an uphill battle. For one, the housing market had cooled significantly. But worse, these home sellers weren’t quite willing to accept this new reality and drop their price.
Several months earlier, these sellers had listed their house with another agent for $525,000. When this failed to bring in an offer, the sellers reduced the price to $499,000. Still no bites.
Neill suggested the sellers drop the price again to $450,000, but they “fought” her recommendation. Neill then suggested the sellers get a second opinion through a pre-listing appraisal. They reluctantly agreed but thought it was a bit “fishy” that the appraiser’s suggested bottom line came in precisely at Neill’s suggested price of $450,000.
Neill could understand their disappointment, given the COVID-19 era of red-hot bidding wars had ebbed alarmingly fast.
“Now, what probably would have sold in a day in February is just sitting,” says Neill, who’s with Re/Max Around Atlanta. “If they’ve already been listed for 90 to 100 days when I get the call, they probably have an inkling” they’re pricing too high.
Still, for many sellers, that’s a tough pill to swallow.
In the end, Neill’s clients agreed to list at $450,000—and were pleasantly surprised by more showings in the first week than in the previous three-month period, and were under contract within days. Ultimately, the sellers were grateful and acknowledged Neill’s counsel was correct. But that’s not always the case.
“Many sellers who missed the top of the market are looking for someone to blame,” Neill says.
Why home sellers are stuck on high prices
All across the country, real estate agents are having difficult conversations with home sellers who can’t quite accept that they won’t get the same price a neighbor did several months earlier.
Realtor.com® data confirms sellers’ worst fears, with the median national list price declining from an all-time high of $449,000 in June to $417,000 in November, according to our most recent monthly report. What’s more, the share of listings with price reductions grew from 9.4% last November to 19.6% this year.
“It is really hard for sellers to adjust to this market, and I have every sympathy for that,” says Joan Rogers, with Windermere Realty Trust based in Portland, OR. “Homeowners are basing their expectations on past information that’s still out there. In the housing market, the past is still with us in a way that is psychologically and emotionally confusing.”
Watch: 5 Ways To Sell Your Home for More Money in Today’s Market
Sean Carpenter, with Coldwell Banker in the Columbus, OH, area, has heard his share of “But my neighbor got X” in the past few months, he says.
“It’s like a New England Patriots fan saying he’s gotten used to winning the Super Bowl,” he explains. “But that was with Tom Brady on the team.”
Conditions are different now, Carpenter notes, and it’s better for you to accept that when your real estate agent tells you than to learn it the hard way, by having your home sit on the market for some time. Because the longer your home sits on the market, the more reluctant buyers will be to take a look—and the cycle spirals downward from there.
Real estate agents often act as therapists for people getting ready to make one of the biggest financial moves of their lives, and the upheaval of this market calls for some serious counseling.
Peter Constance, who works for @properties-Christies International Real Estate in Chicago, often finds himself acting much like a therapist for distraught sellers who fear they’ve missed their big chance to cash in.
He advises home sellers to not dwell on how much more they could have gotten six months ago if they weren’t ready to move then.
“Don’t think of it as a transaction; think of it as a transition,” Constance explains.
Still, being philosophical about the market can go only so far. Here are a few tips to consider when selling, and considering your price, in a challenging housing market.
Consider a Plan B before you execute on Plan A
It’s always a good idea to think about a backup price if your original asking price doesn’t come through, but perhaps never more so than during a market in transition like this. You’ll probably find your real estate agent thinks it’s a good idea as well.
“Sometimes I write into the contract that if we don’t have a certain number of showings or offers by a certain point, they will reduce the price,” says Rogers.
Look at multiple data sources for pricing consideration
Perhaps the best way to price your home is to look at similar homes that have sold recently. But right now, you’ll probably also want to evaluate current listings to see your competition, Rogers says. Look at listings that were pulled off the market to see if there are patterns with those properties.
Don’t take it personally
Do get used to homes not selling immediately.
“We need to get sellers back in the mindset that selling in a day or an hour is not normal,” Neill says. “If mortgage rates were still 3% or 4%, buyers would be knocking down your door. This is just the way the market is right now.”
Adjust your price quickly if you’re not getting any interest
While leaning on your agent’s expertise is always a good idea, even the pros don’t always get it right.
Constance represented a home listing last summer and knew how much a comparable home had just sold for. He suggested an initial listing price of $639,900, with the expectation that the owner might eventually get $620,000. Four weeks later, they had about four showings and no offers.
“The interest rate environment has not only changed, it continues to change,” Constance says. “The mood of the consumer is changing quickly. People are frozen in place, is what I’m seeing. That’s why people like me with 20 years of experience sometimes miss the mark.”
He advised his client to drop the price to $599,000. They immediately had nearly a dozen showings, Constance says, and an offer his client was happy to accept.
Bottom line: It’s best to set the correct price initially. However, if you don’t, then act quickly and decisively to get it right the second time.
Photo Credit: Getty Images