I just noticed this article from Friday’s latimes.com:
Silva said some of his clients are receptive to the idea of cutting prices to sell their homes. But some sellers — those with less motivation to move now — are pulling their homes off the market, said Steve Shrager, an agent with Coldwell Banker in Studio City.
Sellers who can’t get the price they want are choosing to rent their home, or try to sell again in another year.
“They feel the price can’t go anywhere but up,” Shrager said.
Buyers are choosier too, he notes. Though price growth has leveled off, many buyers still aren’t seeing bargains. And while the selection of homes has expanded, some aren’t finding any property they really want.
Some, he said, are choosing to stay put, or maybe try the market again next spring.
“I don’t want to use the word correction, but we’re in a bit of an adjustment period right now,” Shrager said.
Waiting for the spring selling season is fairly normal behavior for both buyers and sellers, Thomas said. But after a decade of boom, bust and boom again, many aren’t sure how to react to a normal market.
“People are not used to this,” he said. “That’s why you get some panic. Eventually these houses will sell. You just have to be patient.”
Most sellers and listing agents will opt for the wait-it-out plan, mostly because they are avoiding the price-might-be-wrong conversation.
Sellers and listing agents don’t know how wrong the current price is, and they don’t WANT to know. All they want is for some nice young family to come along and love the house and price the way they do, and pay full boat.
But the wait-it-out plan doesn’t take into consideration the potential for selling for less, later – and delays the eventual conversation about how much less.
Look how it’s working for this guy – another excerpt:
Patience and price cuts are paying off for Joseph David, an investor and rehabber who listed a blue three-bedroom Craftsman in Highland Park in late June at $624,990. When it went on the market, his agent got a lot of phone calls. Dozens of people showed up at open houses. But none of them pulled the trigger.
“We got a lot of response, but we didn’t get any offers,” David said. “There were a lot of looky-loos.”
Before long, he knocked a bit off his asking price. Then earlier this month, he cut it more sharply, to $549,000.
Interest picked up dramatically. His agent started to get a lot more phone calls, making David confident he’ll get that offer soon.
The investor here is likely to end up at $100,000 under his initial list price, and leave him wondering if he should wait too, rather than taking such a “loss”. But it was never worth $624,990, because the market in late June was healthy enough that he would have gotten offers if the price was close to being right.
The biggest problem is that sellers and listing agents are way too optimistic in the beginning, and are unwilling to adjust fast enough to get in the game.
Here is my list-price rule-of-thumb for sellers:
If you are getting offers, your list price must be within 5% of being right.
If you are getting showings but no offers, your price must be 5% to 10% wrong.
If you’re not having any showings, your price is more than 10% wrong.
Here’s an alternative plan for those sellers caught in this dilemma. Reduce your price once by as much as you can endure (5% to 10%), and if it doesn’t sell by Halloween, then wait until next year.
To just cancel the listing now without a price reduction doesn’t give you any price-discovery data to use when listing next year. Don’t be surprised if next-year’s comps will suggest starting at the lower price, and leave you wondering if you should have just bit the bullet in 2014.