by Rona Fischman
I got a call from A last week. She said that there was a new listing she wanted to check out at open house. The address sounded familiar to me — not in a good way. I warmed up the agent MLS database and my suspicion was confirmed; this house had been on the market a couple of times already. I couldn’t remember it, even after looking at the pictures. (Now, that is a bad sign. I usually remember something about a house beyond the address.) A and her husband saw it and didn’t care for the place. However, the open house was swarmed and the house went under agreement by Monday.
2/17/2012 Listed for $699,900
2/22/2012 Listing Alert Flag set to: Yes – Accepting Additional Offers
2/22/2012 Status Changed to: Under Agreement
Days on the market = 5
Someone new to the market would think this is a great house, a hot house. If it sold immediately, it must be wonderful. That’s because they don’t know about the other attempts to sell it. It looked like this:
This house went unwanted since 2008. It was actually on the market for 152 days.
3/4/2008 Listed for $879,000
9/8/2009 Listed for $799,000
11/18/2010 Listed for $799,000
The problem with this house, by and large, was the price. I have no way of knowing whether the agent recommended the price of $879,000 in 2008 or if the seller insisted on “testing the market.” It doesn’t much matter. Nothing sells for that much over its real value.
It was a good house for $699,900, as demonstrated by its quick sale last week. But, when I saw it at $799,000 last year, my clients instantly rejected it. It does not compare to housing that is worth $799,000 and therefore looked like a hopeless dud. It got filed in my brain that way. The lesson for sellers is that overpricing doesn’t work.
This brings me to a question I get asked all the time: “Should I, as a buyer, look at property that is over my price range?” The answer, of course, is “it depends.”
I have found that going into a property that is WAAY over your price range is not going to hurt you. It is fantasy. So, if you go past a $2M open house, go on in and see how the other half live.
Avoid properties that are around 10-15% over your price range. These will make your choices look just a little shabby. A $699,000 house trying to be a $799,000 house looks like junk. If you are spending $699,000 and you go look at $799,000 houses, the places you can afford will look like junk. This will “ruin your palate” for houses you may actually buy.
I have a way to let my client find overpriced properties that should be in their range. It takes sellers a while to accept that they have overpriced. So, I create a set of searches to find overpriced properties that have had some time to demonstrate their unsalablity at that price to their owners.
Suppose the price limit is a firm $690,000. I will set a search with $690,000 as the limit. Then, I will set an additional search with $720,000 as the limit with 14, 30, or 45+ days on the market, depending on the town and the season. If sales are slow there, I may even set another search with 45, 60 or 90+ days with a limit of $750,000.
I also keep an eye on things that I have seen, and know to be overpriced and I have a buyer for it (if the price gets down to reality level.) The house my clients saw at open house last week was not good enough for that, but some are.