What Is The Cost Of Not Listening To What Buyers Are Saying About Your House?
Buyers tell you what your house is worth. Unfortunately, and irritatingly,
As a Realtor the very best that I can do is show you what your competition is and what houses have sold that are similar to yours. Based on statistics, such as how fast or slow houses are selling, we can try to crystal ball it a little bit.
I want to tell you a story about a seller that did not want to listen to what buyers were saying.
To protect the innocent, :-) , I will call the seller by a fictitious name. Mr. Jones.
Mr. Jones had only owned his house for 3 years. When he bought it buyers were saying yes, yes and there were multiple offers and Mr. Jones won the house.
Unfortunately, within a year some unforeseen circumstances occurred and Mr. Jones was forced to move away and he had to do something with the house. He decided to rent it to some people that really wanted to buy it but couldn't qualify for a mortgage.
Eventually, it became apparent that the renters were not going to be able to buy the house. Mr. Jones was again faced with another difficult decision. At this point, he had to sell it. He was making two mortgage payments and the tenants were only sporadically paying.
Over the course of the three years there had been a good deal of deferred maintenance. Mr. Jones had moved away and hadn't seen it during this time period.
Mr. Jones came to me to list the house. He was adamant that the house was worth at least what he paid for it and probably more. We looked at his competition and what had sold in his neighborhood. The data was sketchy at best because Mr. Jones's house was a little unique. Not weird or anything but it wouldn't appeal to ever buyer.
We decided to list it at what he paid for it to test the market. Not always a smart thing to do but with insufficient data sometimes that is all you can do.
Within 30 days we had 2 offers! Unfortunately, the offers were almost exactly the same but were more than $50,000 less than the asking price. Mr. Jones was infuriated to say the least and many bad words were said.
As a Realtor, I now knew what the market was saying---quite emphatically as a matter of fact. Mr. Jones felt he was being cheated and insulted and wouldn't even counter offer.
Time passed. Eventually, people stopped even looking at the house. He wouldn't do a price reduction so the house became "stale". Time continued to pass until Mr. Jones realized he had to do something. So he agreed to reduce the price $1000. *sigh*
During the ensuing months we had 2 other offers. One was for $35,000 less than the asking price and the other one $30,000 less. Mr. Jones was again insulted. By this time the tenants had moved out and even though it didn't show well before because the tenants weren't all that neat, now the deferred maintenance was obvious.
Time continued to pass. Mr. Jones was really getting pushed now because of the costs of maintaining two residences. He did reduce the price by dribs and drabs but nothing that caused a bonfire of interest.
By this time the house had been on the market 10 months. Fortunately, there was a little market upswing and buyers were looking again. We began to have showings. Hope!
After nearly 11 months on the market we got another offer. Guess how much it was for? Yup. $50,000 less than the original asking price
Of course he was insulted, but this time he was forced to listen to the market. So how much did that 11 months of not listening to the market cost him? I don't know all of the numbers involved but I do know that not only did he lose nearly $50,000 from what he paid for it but in addition he had 11 months of carrying costs from two houses.
It is often said that your first offer is usually your best. That is the market talking. Be wise and listen.