There's an argument I've come across many times working with Albuquerque home sellers. The argument, for a house that is overpriced, is: I don't need to reduce the price, buyer's will just make lower offers.
Well folks, this is not how residential real estate sales work, at least not here in the Duke city.
Buyers do not, in general, bring low offers on over priced houses. It just doesn't happen.
Why not? Because buyers shop for homes based on sales price. Sure, they may want to live in a certain neighborhood, or a certain high school district, but the first question in their minds is "can I afford it?"
Here's a scenario to help sellers understand how a growing percent of home buyers shop for homes, and no, it's not by driving around neighborhoods in search of "For Sale" signs and "Just Listed" flyers. The majority of today's home searches are performed online. Hom buyers now come to me after using an online mortgage calculator and tell me how much they are comfortable spending on their new home. Frequently this is based on what mortgage payment they feel comfortable with.
So let's say they tell me they can afford a home up to $500,000, and they'd like a home in High Desert.
I then take that information and set up a saved search using the Multiple Listing Service (MLS). I'll limit their search to the High Desert area, and I'll set the price range going from, say $450,000 to $520,000.
Why would I setup their home search with a maximum amount of $520,000 when they told me $500,000 was their max? Because I know that Albuquerque homes are currently selling for 96 or 97% of list price, so a home that's priced a litttle high can be brought into range.
I don't set their home search for up to $600,000. It's just not a good idea to send buyer's homes that they can't afford. I suppose they may want to go look at that luxury home they can't afford for fun, but if they can't afford to buy, what's the purpose? Do you want buyers who are not qualified to purchase walking through your home just for fun? Probably not.
So if you're home is priced at $525,000, but you would be happy to take $495,000, the odds it's going to happen are greatly diminished because buyers won't see it. It would be better for you to reduce the price, get more eyes on your home online, and sell within the normal parameters of how home buyers do their searches.
Don't like that at all? Want to hold out for buyers who are not looking online? I can appreciate that, but the National Association of Realtors has gathered data saying that close to 90% of home buyers start their home search online. Marketing your property to 10% of the home buyers out here is not going to get your home sold!
Here's another scenario of how buyers do their online searches. They'll tell me to email them homes starting from $400,000 to $425,000 to see if anything in that price range will work for them. If nothing does, they'll have me increase to $450,000, then maybe $460,000, $470,00, etc until they do find the right home. They probably won't even get to $525,000. If your home is priced too high for the competition, they won't even see it.
Pricing your home correctly is a balancing act between pricing it as high as possible to bring an offer without pricing it so high that no one ever comes to look at it. If your house is not selling, you're out of balance and you need to reduce the price.