The Wiggle Room Myth
When it comes to negotiating, especially on something as big as the sale of a house, none of us wants to leave any money on the table. So I’m not surprised when a seller tells me they want to price their home a little higher than they know they should – to leave a little “wiggle room” when it comes to negotiating.
Anyone with much real estate experience knows this is a fool’s strategy.
Competitively priced properties (those priced closest to the “market value”) generally sell for closer to asking price and in a much quicker amount of time. The most interest a property has is when it’s first on the market. Mispriced properties miss out on the most active buyers.
Overpricing a home (Courtesy of Gary Keller)
I decided to look at the Leavenworth real estate market and see how this played out in 2010.
I didn’t look at all 87 closed sales, but I did look at a random sampling of homes. I chose 20 homes that had price reductions (those with built in “wiggle room”) and I looked at 10 homes that sold without price reductions.
Guess what I found?
The homes that didn’t require a price reduction sold for 96.7% of the original asking price, but those that needed a price reduction sold for 75% of the original price. On a $300,000 home we are talking about a $65,000 difference. They also took an additional 270 days to sell. That could be another $10-$12,000 in mortgage payments over that same time!
Over and over again we see sellers missing out on selling their home because of overpricing.
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Required Disclaimer
NOTE: This representation is based in whole or in part on data supplied by the North Central Washington Association of Realtors or its Multiple Listing Service. Neither the Association nor its MLS guarantees or are in any way responsible for its accuracy. Data maintained by the Association or its MLS may not reflect all real estate activity in the Market.
