Apple or Orange?

by : Julie Jalone


The question, 'If they think my home is overpriced, why don't they offer me something lower?' may be one of the most common heard by real estate agents around the Sacramento area. This seems like a logical seller response to learning that the potential buyer who looked at their home yesterday said, 'We liked the house but it was overpriced.'

The answer to the above question is slightly more complicated than, 'You're right, they should have offered what they think the house is worth.' Today, in the Sacramento real estate market we have a huge number of homes for buyers to choose from and they have been peppered by a flood of news stories making them feel like they are not only in a buyer's market but in complete control and all sellers should just be thankful they are even willing to look. When buyers have as many choices as they have today, they want to find a house they love and make an offer they consider to be a 'great value.' They want 'more for less' is blunt, but is generally the current buyer mentality. I don't blame them; I would be that way too if I was in the market for a house. When my friends and family come to see my new house for the first time, I want them to be awed by it and then I want to say, 'Can you believe we only paid....'

I currently have a listing on a home I think is beautiful, it is located in a good area and is one of nicest homes in the neighborhood. Divorce is the reason it is on the market and because of a number of factors it was, until recently, significantly overpriced. When potential buyers came to see it, they did like it because it shows well, but it didn't compare favorably with other homes they were looking at in their price range.

It was like comparing and apple to an orange. The buyers were in the market for the best orange they could afford and really didn't want an apple even though it was shinny.

To sell a home in this market, the price needs to be set at a level where the house is one of the top two or three best values for the price range. It has to compare favorably to the ten to fifteen and often more homes viewed by potential buyers. The key elements in this equation are location, size, features and upgrades.

I like to take my listing clients out to look at the competition, homes in the general area that have comparable features and a few that have additional features. I tell them to think like a buyer and compare the homes to their own (this is often a difficult assignment). The key to the exercise it to get them to agree where their home fits into the price range in regards to location, size and features. Once we have done that then we can really begin to hone in on the initial asking price which, in my opinion is the most important elements in selling a home in a reasonable period of time. It is the first ten days on the market when a listing gets the most activity and we want to attract those agents and buyers at that time.

What is happening with my listing? We have the price lowered to where it should have been three months ago and it now compares favorably with other listings in the area, and the potential buyers who are visiting it are looking for a shinny apple!