Overpricing is 'kiss of death' for home seller

SMART MOVES

October 03, 1993|By ELLEN JAMES MARTIN

The well-kept split foyer in Catonsville has languished on the market for more than a year. And the owner, a Social Security administrator, has gone through three real estate agents in his attempt to sell the house.

Why won't the brick home sell?

zTC Because the seller clings to the mistaken belief that his property -- located in a neighborhood of 1960s homes -- should fetch as much as properties in a bordering community, where the homes are newer and more spacious, says David McIlvaine, an agent with ERA Caton Realty Co. in Ellicott City.

"We price houses to sell -- not to just sit on the market," says Mr. McIlvaine, who gave up on the Catonsville man's listing after the seller refused to budge from his belief that his home was worth $10,000 more than like homes in the same neighborhood.

All too often, home sellers fail to distinguish between adjoining communities when pricing a home, says Mr. McIlvaine. Just because two neighborhoods are close together doesn't mean they will be perceived in the same way by homebuyers. Even subtle differences in neighborhood reputation and the quality of public schools can influence pricing.

"The real estate agent's responsibility is to depersonalize the home-selling process, offering an objective point of view on price," Mr. McIlvaine says. A sharp home seller will focus less on personal hunches and more on numbers cranked out of the computer about houses in his specific neighborhood, he insists.

*

Failing to distinguish between adjoining neighborhoods is one of five common pricing errors committed by sellers. Here are the others:

* Asking the market for a pricing premium due to personalized home decorating.

"If someone spends $35,000 on a new kitchen, that's certainly going to add to the value. But if you spend a fortune on designer wallpaper, you're not going to get a penny back for that," says Lynn Sherrock, an agent for RE/MAX Advantage in Columbia.

Ms. Sherrock recalls the case of a Columbia woman who had spent $50 a roll to wallpaper the master bedroom of her colonial home. The woman had selected the expensive wallpaper in a bright pink shade, her favorite, and assumed her investment would be returned when she sold.

Not only does personal decorating fail to return your investment on a dollar-for-dollar basis, but in some cases can actually slow the sale of a property, real estate specialists say. That's because your taste and that of others may not match.

"You don't want to personalize a place because that's not going to help you at all in resale," Ms. Sherrock says.

* Pricing high on the basis that an interested buyer will make you an offer.

"If you're over a certain range, some buyers won't even look at your home," says Eileen Rosenberg, an agent for Prudential Preferred Properties in Bethesda.

When buyers start a house search, they usually do so with pricing boundaries in mind. Set your house over one of these invisible pricing hurdles and you can eliminate an entire class of buyers, Ms. Rosenberg says.

Price limits, which can be very definite for many buyers, relate to their income levels and ability to shoulder house payments. And pricing yourself out of the field on the basis that a buyer "can always make a low-ball offer" is an exercise in futility, the Prudential agent says.

* Pricing your house on the basis of an aberrant sale within your own community.

When presented with computer data on the sales of comparable homes in a neighborhood, it's common for a seller to focus on one property that brought in more than other like homes selling in the same neighborhood, Mr. McIlvaine notes.

The agent may or may not be able to explain why one house stands out on the price chart. But if you cling to the notion that your house can sell for as much as the aberrant case you risk the possibility of overpricing, he says.

Just as you should avoid basing the price of your home on the lowest selling comparable in the community, neither should you align yourself to a high flier.

"Go with the median," Mr. McIlvaine says.

* Don't pick an agent on the basis that he promises to deliver a higher price than other agents say your home will bring.

A small minority of agents will go along with a home seller's inflated sense of the value of his home in order to gain a listing agreement. After all, they reckon, they can always pressure the seller to drop the price later.

But the best agents are candid about price from the beginning, Ms. Rosenberg says. "Houses that are well-priced from the outset sell more quickly and for a better price than those that are overpriced."

The most action on a home listing usually comes within the first three weeks after it goes on the market, according to Ms. Rosenberg. If you discourage showings during this prime period because of an inflated asking price, you may never do as well again. "Overpricing is the kiss of death," she says.

(Ellen James Martin is a columnist for The Baltimore Sun.)

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