Risks to over- pricing a home
By CLINT FREEMAN
Coldwell Banker Best Realty
Setting a correct price for a home is critical in getting it sold. Now that the spring buying rush seems to have settled down in the local market, sellers need to consider once again their list price. If a home has sat on the market for 60 days without any interest or showings, it is time to carefully consider adjusting the asking price. Sellers need to be aware of the risks to overpricing a home:
• Reduces the showing activity because realtors and buyers know when a home is overpriced. Internet-savvy buyers now carefully check prices across a variety of websites and then discuss values with their realtor. If a home is overpriced, most buyers will not waste their time viewing the home because they know the seller is being unrealistic.
• Increases the time a home will sit on the market. Overpriced homes invariably stay on the market a longer period of time. Over time the seller ends up paying more on mortgage, insurance, and taxes the longer the home stays on the market.
• Attracts “low-ball” offers. Some sellers have the idea that setting a higher price will allow buyers some bargaining room. This strategy can often result in a purchase offer that is a bit lower than the home’s actual value. The seller then believes the buyers have submitted a “low-ball” offer when in fact the offer price is competitive.
• Attracts the wrong prospects. Buyers expect certain features in a home in a certain price range. If the asking price does not live up to those standards and upgrades, a buyer will be off with the realtor to view another home across town.
• Helps sell the competition. Other competing homes in the price range will inevitably be a better buy, and a buyer will naturally select another home. Having an overpriced home on the market is actually doing a favor for other sellers.
• Allows for appraisal problems. Even if the buyer and seller agree to a higher purchase price, issues can arise when the appraisal report arrives and declares the home’s value to be lower than the purchase price. If this occurs, there is another negotiation to discover who will bend with the price, up or down — the buyer, the seller, or both.
For more on the local market go to www.ridgecrestcahomes.com.
Ridgecrest Facts as of May 2014
• To date there are 109 homes on the market ranging from $49,900 to $699,900.
• The past three months’ prices per square foot average of sold single-family homes are College Heights $121, NW $97, NE $50, SE $77, SW $84 and RC Heights $78.
• The median home price decreased 30.97 percent from $180,000 in March to $124,250 in April 2014.
California Fast Facts
• The California median home price is $435,470.
• The lowest median home prices areGlenn $140,000 and Ridgecrest $124,250.
• The highest median home price by region is Marin at $1.16 million (Source: C.A.R.)Story First Published: 2014-07-02