We hear this from sellers all the time. We discuss reducing the price after we have marketed the property for several weeks and have received no offers. Sellers don’t want to reduce their price because they are hoping that they will get lucky and some desperate buyer will pay their price. We talk about how buyers don’t want to make an insulting offer and anger the seller. The seller claims they would not be offended (food for another blog). So they say, if a buyer likes the house, why don’t they make an offer?
I have discovered the truth about this: buyers don’t make offers on properties they think are overpriced because they are conditioned not to! A prospective buyer called me about a listing that has been on themarket about 3 weeks. She wanted to know if we were planning to reduce the price soon. I chatted with her about the house, which she had seen at an open house and she loved it. But she felt it was priced too high. However, she said she knew that often a house would come on too high and they would reduce it if no offers came in.
What kind of offer would she want to make? It turns out that she thinks it’s about $100,000 too high. I told her that the seller was not in a position to sell it for that much less. I also told her she might want to look at homes priced under $450,000 if that was her price range.
After we hung up, I thought of a listing I have that is coming on the market next month. I called her back and told her about it--a cute house in the hills of Highland Park near Eagle Rock that will come on at $399,000--a short sale that has been tenant occupied for a year. She said she would be interested if it was just as nicely done as the one she had seen.
Who knows if this buyer is at all realistic about values, but she does have an educated opinion. She may be hoping that $400,000 will buy her a perfectly done house in a nice neighborhood in Eagle Rock--a not very likely possibility. When my new listing is ready for the market, you can be sure that I will call her to tell her about it and find out just how serious she is.
But the lesson here is for sellers: buyers don’t want to begin a negotiation on a negative note by making a low offer. They have seen a lot of properties have price reductions after being on the market a fairly short time. When they see a price drop, they know that a seller is willing to negotiate and are more likely to make an offer at that point. So if you have been trying a higher price and it hasn’t brought any offers, consider making a price reduction to stimulate activity, because often that is just what a buyer is waiting for.