A very common question we get from sellers is "Why not price my home high enough to leave room to negotiate?"  This is just about the most common question we get when talking with sellers and potential customers.  It would be really peachy to just say that it is a good idea, go ahead and price your home above the market, someone will buy it.  But we can't.  The following is meant mostly for our market, Tampa Bay.

In truth, we do not take the easy way out, and by giving the customer the hard facts of today's real estate market, they may decide to list with an agent who is willing to put their home on the market at a too high price, let it sit for six months and cost them money and time.  The most successful way we have found to address this question is to make a visual so they can "see" our point about the current market.  After showing the customer all the data from our research into prices in their neighborhood, surrounding area and the greater area also, including less than positive data from NAR and the local and national media, there are many who still immediately ask why not build in negotiating room.  One response we have had success with is to let them know the reality of pricing and the way the market searches for real estate.

If the house has a market value of $175,000 and they want to price their home at $200,000, for the "wiggle room", we let them know the market that is looking in their real price range doesn't even see their house because it is too high and is in a different search bracket.  Buyers, and agents, often search in $25,000 brackets and if someone is looking for a home in the $175,000 range, because that is what they are approved for, they are not going to even look at anything priced for $200,000.  They won't often even look for anything priced at $180,000 since they are not approved.  Today's buyer is very savvy and is aware that if houses are priced too high, there are many, many others that are correctly priced and there is no point in getting into a haggle over a few thousand dollars for an over-priced house when there are many others that will accept a price that is fair on the first offer.

For example, one visual that has been successful is to compare the price of a house to catching a train.  I know the train is scheduled to leave the station at noon.  So I show up at ten after and wait, and wait, and wait.  Why?  Because the train has already left the station.  In this market, the prices are not going up, so why price a house above the market?  All that does is cost the seller time and money, because in this down real estate market, the longer a house is on the market the more value it loses.  Thus, being priced for "negotiating room" is being too high in the marketplace and buyers are not even going to find the house to consider making an offer that the seller might accept.  In other words, that train has left the station and your house is going to sit on the market, become a stale listing, lose value and after six months of being ignored by the market because the seller wanted more, and the agent allowed it, the customer is going to feel that the real estate agent did not do his job.

So, the customer must realize that realtor consultants are working to sell your home.  Otherwise, the customer does not sell her home, loses time and money and by the way, the realtor not only does not get paid, but also loses money.  An overpriced listing is almost worse than no listing at all.  It is the responsibility of realtor consultants to price a home correctly in this market to best serve their customers.  As long as prices continue to fall, there is no point to price your home higher than where the level has already been.