Overpricing Dilemma

AS THE INVENTORY CONTINUES TO RISE, MORE SELLERS ARE REDUCING THEIR ASKING PRICES OR PULLING THEIR HOMES OFF
THE MARKET ALTOGETHER, INDICATIVE THAT FAR TOO MANY HOMES ARE OVERPRICED

Garage sales are a great way to get rid of the constant accumulation of “stuff” that is no longer used. A successful sale opens up more room and space in the garage, especially
when it is a large item like a bike or furniture. Unfortunately, for many, the initial asking price is stretched to a point where nobody is interested. As the morning wears on, it is time to make a decision: lug that large piece of furniture back into the garage, unwilling to part because of price, or lower the price to a point where someone will finally buy it. There is not as much interest because the potential buyer traffic fades as the day grows longer. The price gets slashed further until someone finally agrees to the lowered price.
Similarly, many sellers jump into the housing arena and stretch the asking price for a variety of reasons, only to sit on the market with no offers and no success. They, too, must decide whether to reduce the asking price to the Fair Market Value or pull their home off the market altogether. Many sellers in Orange County have thrown in the proverbial towel. Through September, 21% more homes have been pulled off the market than last year, 3,708 compared to 3,075.  It was up 79% year over year in September, 636 versus 356. After a lack of success in the Spring and Summer Markets, now that the kids are back in school, sellers have realized that it is no longer the most favorable time of the year to sell.

Another telling sign that sellers have been setting unrealistic expectations is the high number of sellers adjusting their asking price. A surprising 34% of the current listing
inventory has reduced the asking price at least once.  Proper pricing is essential for a seller to secure success. Many homeowners come on the market feeling that their home is the absolute best in the neighborhood and, therefore, should fetch the highest sales price, more than the most recent comparable sale. This leads to stretching the price too high and deters buyers from writing an offer.

Excerpt taken from Stephen Thomas