George Ballantyne is a seasoned and well-respected authority on “what sells and what doesn’t sell. ”
He has spent many years marketing high-end Maine properties. Those of you who routinely read my blogs will recall that recently wrote a blog on this same subject explaining how the housing supply inventory creates either a seller’s or buyer’s market… which directly impacts the behavior of buyers.
Markets are very efficient. Competitively-priced properties sell. Overpriced properties remain on the market indefinitely.
Buyers compete for competitively-priced properties. It’s more likely buyers will bid over listing price to secure a property than submit a low offer on an overpriced listing. We want, what others want. Scarcity creates demand and vice versa.
Stubborn testing the market is a very expensive choice of marketing. Testing means looking for a buyer who will pay more than “market value”. You can spend a lot of time (days on market and several price revisions) looking for a buyer who will pay more than market value. It is possible that you may never find one!
In an Internet-driven world you can often determine “market value” in days or months. The print driven world (magazines and newspapers) required months or years to reach a comparable number of buyers.
In each market and price range, there is a measurable bracket between listing and selling price that will stimulate interest. Stated differently, if the difference between listing and selling price is too great, no offers will be submitted. This is readily-apparent when one sees all the For Sale signs that are fading with age on so many properties.
There is seldom a relationship between the current owners cost and market value.
…A difficult concept even for the most financially sophisticated.
We want what others want. A competitively-priced property attracts buyers like a magnet. You do not need to leave room for negotiation. When there’s competition, buyers may bid the property above asking price.
What a seller needs to net or what a buyer can afford to pay, does not equal market value!
Buyers want to be surrounded by properties of comparable or greater value. If their plans change, they wish assurance they will be able to sell. There is a lot of heartburn for seller’s trying to sell their property for less than they paid for it… or worst, less than what remains on their mortgage.
Buyers pay attention to competitively-priced properties. Cooperating brokers focus their efforts, where they anticipate there will be a sale. When the distance between listing and selling price is more than 10%- 15%, it’s hard to get the attention of both buyers and brokers.
Each price revision creates the expectation that there may be another. Each time the property is “introduced” at a new price, there is an expectation of increased activity. Based on a statistical analysis, there is little activity until the “last” price is within 10% of the selling price.