Pricing and negotiation in residential real estate is based on perception of value. There are two sides to the perception - how the seller sees the house and how the buyer sees it - and there is usually a gap between them.
The seller has a great deal of emotion invested into the house. They have a price in mind based on how much they paid for the house, how much they have invested in their property during their ownership, previous sales of similar properties and what they need to complete their future plans. And, above all, the emotions they feel towards the home have a significant impact on what they decide is the asking price. Many times the seller wants a higher than market price because they feel the house is worth it.
On the other side, the buyer's perception of value is not based on any of the above. The condition, curb appeal and interior presentation of the house either enhance or decrease the buyer's desire for the house. The price range is determined by the mortgage qualifications and their knowledge of market conditions.
What does this mean to buyers? In former appreciating markets when inventories were low, buyers had to compete for the few houses available and bid prices up. In the current depreciating market with high inventories buyers know they are in control of offering prices. However, when buyers see what they perceive as a very well-priced home that exactly meets their needs; they will be competing with other buyers who also see that good value resulting in higher offering prices.
What does this mean to sellers? To realize the highest price in today's depreciating market, sellers need to see their house as buyers would. They need to analyze market data and also learn what buyers are actually paying today. Sellers need to have the condition and look of the house staged in a way that buyers see the house, not the clutter. They need to offer a home warranty to take away buyer uncertainty about the working components of the home. In short, the price must reflect current market conditions. When first placed on the market, it should be one of the very well-priced homes that attract many buyers who could compete emotionally for the home.
If you or someone you know would like advice as a seller or a buyer in today's market, I am always ready to assist with my real estate expertise.
Charming tudor on this adorable street in the Roland Park/Keswick neighhborhood.
