John & Lisa Durkin, "The Topgun Team", Real Estate Blog

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A Tree In The Forest and A House On The Market

October 30th, 2007 4:16 PM

A Tree In The Forest and A House On The Market

Maybe you’ve heard the old existentialist’s conundrum about the tree in the forest. “If a tree falls over and no one is there to hear it, does it really make any noise”? A similar statement can be made about the reality of our real estate market right now. “If a seller lowers the price of the home, and no one is there to notice it, did it really happen”? Did it really matter, for that matter?

No matter how much you market and advertise any product, there is always some price that will cause it to be purchased without a penny or ounce of effort being expended to make the sale happen. Marketing involves finding out what the market wants and delivering it to them in the most efficient manner possible. Advertising has to do with building the awareness of the product in the market and increasing its perceived value to the consumer. In a perfect world you find out exactly what consumers want like Coca Cola and make it the most recognized product in the world with people willing to pay well for it. Other times you design an Edsel and have the market tell you that the product will not be purchased at any price.

Normally, in the Real Estate market, there is some price at which the property will sell right away regardless of prior marketing (for instance, a comparative market analysis), or any advertising. The mission of a Realtor® effective in marketing and advertising is to get the seller the maximum price in the shortest amount of time with the least expenditure. (kind of sums up business in general). In days past – in a “normal” real estate market, if a home didn’t sell in a month or so, the next step was always to recommend a price reduction, with the assumption that the initial price was a little too high. Until recently that was still a reasonable approach in this market too. In fact, there are many homes and lots out there that continue to have the price reduced over and over again.

We have recently come to the conclusion that this is folly under the current circumstances. In spite of massive price reductions, many of these properties are not even getting inquiries or lookers. Look at the inventories piling up. In some neighborhoods the inventory exceeds a one to two year supply. And yet, desperate sellers keep reducing the prices to an audience that doesn’t exist. They are simply competing with themselves or their neighbors to see who has the cheapest home on the street. Despite the efforts, the homes are still not selling. When the lone buyer shows up, he will likely low ball the extremely discounted price even further.

Bottom line is this – there are few buyers out there to witness the price lowering. If your property is already in line with what has sold recently or is for sale nearby STOP! If a buyer shows up in the neighborhood they will likely see yours. If it meets their needs they will throw the low ball offer your way. No need to do the work for them.

Our recommendation at this juncture is to stop dropping your prices. Find the best comparable range and tough it out. The trees may fall, but no one is going to know about it for some time to come.

Posted by John and Lisa Durkin 'The Topgun Team' on October 30th, 2007 4:16 PMPost a Comment (0)

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