One of the most difficult things for Realtors is assisting our clients with the pricing of their homes. Unfortunately, too many want to price according to what they WANT or NEED, and not what their property will bear in this market. Many of our neighborhoods have seen depreciation or at least have remained flat in recent years, which has caused sellers to actually bring money to the table rather than walk away with proceeds. Of course, when there are no funds to bring & they must move, we are seeing more & more people who are asking their banks to accept short payoffs (this I will address in a future post).

Our training is to guide our clients but they are the ones who are responsible for actually setting the price of their home. I make it a point to show my objectivity by working through the recently SOLD comparables in the neighborhood with my clients. While some are very good at recognizing the value through this exercise, some are in complete denial. I have had a couple of folks who even though I shared very objective data, they still insisted on setting the price grossly above the market. I should have simply declined but chose to go along with the plan for enough time to show them that the market does not like their price. Of course, both of these “experiments” did not turn out well as both were so out of touch with reality, that they eventually blamed me for not being able to find someone who would purchase their over-priced homes.

I feel that it is important to emphasize to my clients, that it is not what they think their home is worth, what I think, or even what a buyer thinks — the most important is what the appraiser thinks. The sold comparables do not lie & they will be the same ones that the appraiser will use. Since the press is always looking for someone to blame, the appraisers certainly did take some heat for the foreclosure “crisis” & I have seen quite a bit more conservatism during the last year. The lenders are also getting much more sensitive to making sure that they are not loaning more than what the property is worth. So, it is not surprising that I am hearing more and more examples of properties that are not appraising, and since this is usually done closer to the closing date, it is always a particularly bad time to find out that the sale can not take place without a substantial price reduction.

This will generally not be an issue, if the property is priced reasonably close to the other solds in the neighborhood. I do not at all recommend it, but if one absolutely must test the market on the high end, be sure that this experiment only last for a couple of weeks and not months. Beware however, as in this market of reduced buyers, you might be missing THE ONE who would have seen the property while it was fresh & new, but who declined to view it due to its price. A low number of showings is a definite sign of being over-priced. Showings with no offers or other expressions of interest reflect negatively on the price and/or condition.

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