There are many strategies involved when selling a home and pricing is just one of those, but arguably is the most important! If a home is overpriced it is likely to languish on the market, even if the market is hot and inventories are low. There has never been a time in history when buyers are more educated! They have so much information at their finger tips that they can readily ascertain approximate values by spending a few hours on the couch cruising for real estate listings on their cell phone. While that process is not perfect, it is sufficient to enable buyers with awareness like never before.
It becomes easy to tell which listings may be overpriced, simply by checking the market time on the listing. Some listings that have been on the market for an extended period are much like the dusty can of beans on the shelf at the grocery store that people push aside to reach the fresher version.
The price of some types of listings however, may be more difficult to determine than the cookie cutter houses in a subdivision. For example, consider a remote listing of ten acres and an off-the-grid hunting cabin. There is nothing like it on the market, so determining the value is more difficult. The reason this listing may be slow to sell could be due to the uniqueness of the property rather than the price point. It requires a cash buyer or very large down payment, so that fact limits the qualified buyers to an even smaller pool, but probably does not make the property worth less! When a sale seems sluggish, the most obvious solution seems to be to reduce the price until the property sells, but that may not be the strategy of choice for a seller who wishes to recoup money they’ve spent on development.
Another example is a remote property that has lingered on the market for several years, even though the list price is half of actual dollars spent ($1.4 million) to develop this dream home. It sits on the top of a mountain with a mile of driveway that requires maintenance especially in winter months. That limits the number of buyers who have the stomach for this location, but does that automatically mean it is overpriced?
So, what is a property really worth? Who gets to decide that? The truth is that a ready-willing-and-able-buyer who makes the purchase decides what the value is! The seller’s opinion is a wish, the Realtor’s® opinion is an educated guess, and the tire-kickers opinion does not count!