Gone are the days where you can overprice a home and think buyers will look anyway and make an offer. They have so many homes to choose from why deal with an overpriced/in denial seller. It's a tug of war, not against the buyer and seller because the buyer doesn't perceive that home as an option. The tug of war is between the seller and the reality of the market.
The fact is this drives down prices. By a seller holding out until the surrender it's too late for the initial suggested price. the market has moved again. See Below
Home should be listed at $250,000 (from $200,000-$250,000 there are 53 homes for sale)
Seller prices it at $275,000 (from $250,000-$300,000 there are 62 homes for sale)
That's of a total area inventory of 463 homes ranging from $100,000 to $2,000,000. That is a huge chunk of the market.
After 6 months seller reduces to $264,500 (Unfortunately the $250,000 ship has sailed)
The seller considers $250,000 and is not happy about it. The bad news is the price should now be $240,000 with a likely sales price between $220,000 and $230,000
10 months later new price $250,000 (offers start coming in at 200,000)
Final Sales Price $218,000
(Due to the comparable properties that have sold during this listing period this is the highest and best price the market and this property can demand and substantiate with the lender and the buyers)
If the seller in this scenario had listed at $250,000 when they needed to , they would have sold closer to $240,000. That is a loss of over $22,000 dollars. Unfortunately we have seen this same scenario with much bigger losses. Once prices have moved property owners will have to wait for incremental increases to begin that will most likely be very modest compared to what was experienced in the past. That being said, it would take 4 years for the owner in this example to get back where they started with $250,000.
When you begin to factor in double mortgage payments, maintaining more than one home the loss is even bigger. If you really want to sell your home, find out how much competition you have and where they are priced not just what has sold. You have to cause the buyer to choose you. You want to be the Bride not the Bridesmaid!!
Appraisers are having to include active and pending sales in their appraisal to assure the lender not just of past sales but where the market is and where it is going!
Be realistic, view your competition.
Why are the ones that are selling going under contract?
Did those buyers even look at your home?
Waiting will cost you. Be the leader not the follower. The sales that go before you set the market. If you don't need to sell now and you don't like the price take your home off the market. It's only driving down prices even further. Prices went up when buyers were fighting over the sellers. Prices go down when sellers are fighting over the buyers. Less inventory, less choices prices stabilize. Supply and demand in balance=healthy market!