Is Your House A Bad Apple?
If your property has been on the market month after month with no offers, that may be a sign that you need to lower your price. Here's why ...
Imagine that you go to the supermarket and are deciding which of two apples you want to buy. You have an apple in each hand, one is 75-cents and the other is only 50-cents. Both are the same size, same deep, red color, weigh the same, look the same and probably will taste the same. If you're like most shoppers you are probably asking yourself why you should pay more for what appears to be the same thing. Like most people, you'll put down the 75-cent apple and buy the 50-cent apple.
Well, along comes the next apple shopper who does the same thing, picks up the two apples and puts down the 75-cent apple. The next shopper picks up the 75-cent apple and puts it down. Up, down. Up, down. Up, down.
Pretty soon, that 75-cent apple has been picked up and put down, day in and day out by shopper after shopper. In a few days, it starts to look pretty beat up and bruised. It's not nearly as shiny anymore and doesn't look as appetizing. It's lost its appeal.
So, in order to sell the 75-cent apple, what does the produce manager have to do? Why, he has to drop the price. First he lowers the price to 50-cents, but the apple doesn't look as red and fresh as the 50-cent apples, so he has to cut the price again, this time to 35-cents and eventually to 25-cents in order to get that beat-up old apple to sell.
Don't you think the produce manager should have priced the apple at 50-cents to begin with? He would likely have sold it quickly, made his profit, and been on his way to the bank with the money.
The same thing holds true in real estate. People shop for real estate the same way they shop for apples. They use the principal of substitution. This principal states that there is no reason to pay a higher price for two essentially similar items. People will consistently buy the lower priced of two equal products.
Your property is probably pretty similar to other houses in your neighborhood. If it is overpriced, people will buy the other houses in your area and not make offers on your house. After time, your house starts to look worn and tired no matter how hard you try to keep it looking fresh. In addition, buyers know it has been on the market for a long time and so do the real estate agents who work in your area. The natural question for buyers and agents is "what's wrong with that house that nobody wants it?" So, they stop coming to see your place.
After a number of months, you lower the price to where it should have been in the first place -- just like our 75-cent apple finally got priced to 50-cents. But by now your property is an old, tired listing and there's no real excitement from anybody about coming over and seeing it. So, you have to lower your price again and again. Eventually, you end up selling the house for less than its true market value.
This illustrates why overpricing is a bad idea. A house that is overpriced at the beginning of a listing period usually spends a much longer time on the market and eventually is sold for less than it's true market value. If the owner had priced the house properly at the beginning of the listing, the house probably would have been sold quickly and for a figure much closer to its true market value.
If your house has been on the market for month after month, it's time to ask yourself if you're trying to sell a bad apple.
For more information about real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.
Imagine that you go to the supermarket and are deciding which of two apples you want to buy. You have an apple in each hand, one is 75-cents and the other is only 50-cents. Both are the same size, same deep, red color, weigh the same, look the same and probably will taste the same. If you're like most shoppers you are probably asking yourself why you should pay more for what appears to be the same thing. Like most people, you'll put down the 75-cent apple and buy the 50-cent apple.
Well, along comes the next apple shopper who does the same thing, picks up the two apples and puts down the 75-cent apple. The next shopper picks up the 75-cent apple and puts it down. Up, down. Up, down. Up, down.
Pretty soon, that 75-cent apple has been picked up and put down, day in and day out by shopper after shopper. In a few days, it starts to look pretty beat up and bruised. It's not nearly as shiny anymore and doesn't look as appetizing. It's lost its appeal.
So, in order to sell the 75-cent apple, what does the produce manager have to do? Why, he has to drop the price. First he lowers the price to 50-cents, but the apple doesn't look as red and fresh as the 50-cent apples, so he has to cut the price again, this time to 35-cents and eventually to 25-cents in order to get that beat-up old apple to sell.
Don't you think the produce manager should have priced the apple at 50-cents to begin with? He would likely have sold it quickly, made his profit, and been on his way to the bank with the money.
The same thing holds true in real estate. People shop for real estate the same way they shop for apples. They use the principal of substitution. This principal states that there is no reason to pay a higher price for two essentially similar items. People will consistently buy the lower priced of two equal products.
Your property is probably pretty similar to other houses in your neighborhood. If it is overpriced, people will buy the other houses in your area and not make offers on your house. After time, your house starts to look worn and tired no matter how hard you try to keep it looking fresh. In addition, buyers know it has been on the market for a long time and so do the real estate agents who work in your area. The natural question for buyers and agents is "what's wrong with that house that nobody wants it?" So, they stop coming to see your place.
After a number of months, you lower the price to where it should have been in the first place -- just like our 75-cent apple finally got priced to 50-cents. But by now your property is an old, tired listing and there's no real excitement from anybody about coming over and seeing it. So, you have to lower your price again and again. Eventually, you end up selling the house for less than its true market value.
This illustrates why overpricing is a bad idea. A house that is overpriced at the beginning of a listing period usually spends a much longer time on the market and eventually is sold for less than it's true market value. If the owner had priced the house properly at the beginning of the listing, the house probably would have been sold quickly and for a figure much closer to its true market value.
If your house has been on the market for month after month, it's time to ask yourself if you're trying to sell a bad apple.
For more information about real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.
-30-
posted by Terry Ward at 4:17 AM
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