A cautionary tale

I know a very nice young couple who are thinking of listing their house in another town and have received conflicting advice. Their agent wants them to shave 10% off what they paid for it four years ago, while others tell them to list it at at least what they paid for it. I’m with their agent on this and in fact I’d recommend taking another 5% off from that. Here’s a sad tale showing why:

52 Fairfield Road, a good house on a somewhat tricky curve, sold for $2.4 million in March 2006. In March, 2007, the buyers tried reselling it for $2.9 and, having lost momentum with that kind of overpricing, rode it down through a couple of price drops until it expired, unsold. It’s back on today, this time at $2.150 million. That’s a good price and I hope they get it, but I suspect they’d have sold their house for more and moved on sooner had they priced it more realistically to begin with.

In this market, the only buyers are bargain hunters. Pricing your house for what you paid for it says, in effect, that you are determined not to take a hit , and that scares bargain hunters off – they wantyou to take a hit –   that’s how they know they’re getting a bargain. Harsh, but don’t forget, you’ll be doing exactly the same thing to whoever is selling the next house you want.

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3 responses to “A cautionary tale

  1. pfar

    This kind of sums it up. “With no one in New York certain just how far apartment prices have fallen from their peak in 2008, apartment sellers are learning that if they don’t advertise a discount, some potential buyers believe they’re being scammed. Some simply laugh in their faces. Yet if sellers do give a big discount, apartment hunters are demanding an even steeper one or simply fading away. Kathryn Higgins, an associate broker with DJK Residential who has a master’s degree in psychology and has taught it at the college level, said, “We’re seeing two psychologies: the passive-aggressive and the approach-avoid.”

  2. W.

    “In this market, the only buyers are bargain hunters. Pricing your house for what you paid for it says, in effect, that you are determined not to take a hit.”

    So true. My guess is that most sellers still do not accept that asking price is more of a signal than anything else right now. Good pricing right now should be seen as an invitation to negotiate. Many sellers still assume that they should dictate terms. This attitude is the message an unrealistically high priced house sends and it is simply a waste of time for any buyer to approach you when others are signalling that they are ready to deal.

  3. anonymous

    LOL…any Greenwich buyer (or seller) who needs a “psychologist” to assist w/negotiation or pricing is probably rather inept at his day job and has mispriced stuff all his life anyway, as has the “psychologist”