In real estate, there are generally the following key things that affect value of a property: 1) Location, 2) Condition 3) Size/floorplan. Other less tangible things that may affect value are the availability of financing, HOA issues & rarity of the property. If any or all of the factors of location, condition, size, financing, etc are relatively undesirable, the property will still sell if it is priced aggressively enough. So we can think of these factors as “legs” of a stool that support the price. If any of these factors is “less” than others, than the price will need to be lower also.
Price is NOT the same as value. Price is the offering, tentative guess at value that the Seller puts on the property. A lower price will result in more showings, more potential Buyers to see the property, and in general more exposure of the unique features of any particular property. Many Sellers make the mistake of thinking that they have to have their asking price include a cushion for negotiations and set the asking price too high. However, this results in reduced exposure (lack of showings/interest) for their home, and ultimately causes their home to linger on the market far too long and requires price reductions far more than would have been required if the home had been priced lower in the first place.
In general, Sellers need to realize that their best days for showing are in the first month that the property is on the market. This is when the momentum and excitement of the new listing is highest and the attention of the local real estate agents (who bring the buyers) for the property is highest. For roughly every 10 showings, there should be an offer or the price is too high. By pricing a little lower, the Sellers ultimately have a higher chance of getting that price rather than a much lower one down the line.
If a home has already been priced for a while without offers, there are a couple of remedies. Obviously, you can’t change location, but you can improve the condition with new carpet and paint, landscaping, or other cosmetics. You also might be able to improve something else about the property: We recently sold a home that was in terrific condition, nearly new, but was only a three bedroom in a part of town where most homes are four or five bedrooms. One way to get the home sold was to lower the price, but in order to get this home sold at the price he wanted, the seller offered financing, which increased the desirability of the home. In a similar situation, we’ve seen a Seller legally convert a third garage to a fourth bedroom, which was more in demand for the area and resulted in a quick sale after months on the market.