Chasing the Market Down – Are You Guilty?

Are you “Chasing the Market Down”?

Before your Long Beach home was listed you reviewed your neighborhood comparables, current market conditions and the location and condition of your home with your Long Beach REALTOR®; then determined your listing price of $750,000.   You were aware that prices in most markets nationwide have been declining and that declining prices would necessitate price reductions, if your home didn’t sell in a timely manner. Your REALTOR® explained that not reducing your price could cause you to chase the market down.

Your home is placed on the MLS, is advertised in the local paper, is placed on many important Internet real estate listing sites, lovely fliers have been placed in your home and the sign is up in your front yard.  Several showings occur the first week, a few the second, one buyer comes through with their agent the third week.  Whats up with this?  Why are so few buyers coming to see my beautiful home?  Calling the REALTOR® to have a little chat with them and find out what is wrong.

Shortly after your home went onto the MLS the Long Beach real estate market took a steep decline.  A consultation with your REALTOR® revealed two new comparable listings in your community priced well below your current list price at $725,000 and $705,000.  At about the same time a couple of other comparable homes for sale, in your neighborhood, had reduced their listing prices to $720,000 & $710,000.  You were now priced high on the market at $750,000, on the market for 21 days and your REALTOR® says, in need of a large price reduction.

While you knew that you would likely have to reduce your price you didn’t think that a $50,000 price reduction would be in order just 21 days after placing your home on the market; you resist and only agree to a $25,000 price reduction, after all that is a lot of money out of your pocket – right?  You are now sitting on the market in your area at $725,000. Your competition is priced at:

1. $705,000
2. $710,000
3. $720,000
4. $725,000

You are now one of the two highest prices in your neighborhood, congratulations!  Are you surprised when two weeks go by and only two buyers are interested in viewing your home?

Your REALTOR® calls you and tells you just what you have been waiting to hear, an offer has been received, when can they come by to discuss it?  Excited you inquire “How Much did they Offer?”  Your blood begins to boil when you are informed that the buyer has offered $675,000 and has requested 3% in closing costs, your 2 large plasma TVs and the dining room furniture which cost you a small fortune.  Bellowing into the phone you instruct your REALTOR® not to bother coming over – just decline the offer.  You do not want to hear about a counter offer, this buyer is trying to rob you and is clearly out of their mind if they think they can buy a home in your neighborhood for that price!  The gall of that buyer!

The home currently listed at $705,000 accepts their offer and closes escrow 30 days later.  You are still sitting on the market at $725,000 and are no longer receiving showings.  The neighbors are getting nervous watching prices drop so quickly and 3 more homes in your neighborhood come onto the market – two of them just down the block from your home. The 3 homes that were on the market at $710, $720 and $725 have reduced their prices and you follow suit reducing your price to $710.  The competition?

1. $675,000
2. $679,000
3. $689,000
4. $699,000
5. $705,000
6. $710,000

Congratulations you are still sitting at the top of the heap!  You really needed to take a big leap, but you just could not wrap yourself around it.  Your wife is starting to put the heat on you to get the house sold, you need to move soon; your life is getting very complicated.  Calling the damned REALTOR®!  What exactly is that REALTOR® doing to drive buyer traffic to my home?

Two more homes in your area sell.  The $675 home sells for $660.  The $679 home sells for $655.  Doesn’t make sense!  Nothing makes sense anymore-what the heck is going on?  How could prices drop by almost $100,000 in such a short time?

Two more homes in your neighborhood come onto the market, your wife is driving you crazy, you reduce your price to $660,000 in a desperate effort to sell and get the monkey off of your back.  Stupid REALTOR®!  The competition?

1. $659,000
2. $660,000
3. $675,000
4. $699,000
5. $705,000
6. $710,000

An offer comes in at $655,000.  They want 3% in closing costs and the damned plasma TVs (whats with the damned plasma TVs anyway?!?)  You tell the REALTOR® to get to your house as fast as possible and accept the offer as written.  Your wife is standing behind you with a bat at this point!

You just learned what it means to be guilty of “Chasing the Market Down”.  Had you taken the leap earlier your home would have sold faster and you would have netted much more profit.

Chasing the Market Down is a very serious situation in today’s real estate market.  Many sellers are doing this across the nation.  The clear majority of them never sell.  The expired, canceled and withdrawn listings on the MLS reflect far more properties than the Sold’s do.  Unless you actually need to sell your home this is not the time to be on the market.

If your Long Beach home is currently on the market or if you are thinking of placing your home onto the Long Beach Real Estate market:

• consider the comparables carefully – get ahead of them
  
• review them weekly with your REALTOR® – stay ahead of them
  
• adjust your price to remain competitive – dont play games
  
• dont kid yourself about the actual value of your home – its worth what a buyer will pay
  
• dont be the next seller guilty of “Chasing the Market Down”.
  

If you suspect that you are Chasing Down the Market give your Realtor a call today.

Have to go deal with an offer……….

Posted on February 1, 2008 by Laurie Manny