In a buyer’s market, price is king

By Joel Persinger
YourRealEstateDude.com

The real estate market is like the tide in that it ebbs and flows. For a time, the market may be hopping with homes selling like hotcakes and people from every walk of life jumping into the market, hoping to make a quick buck. Then the tide will go out and the market will change. Soon homes are for sale at every turn and buyers are so scarce it’s almost as if they’ve jumped on the nearest space ship and left the planet all together.

The one constant in all of this is that the vast majority of sellers try to ring every dime out of the sale and have an almost mythical distaste for agents who urge them to drop their asking price in order to get a sale going in the first place. This can leave the agents frustrated, the sellers angry and the houses sitting on the market for long periods unsold.

Since I’m representing a number of sellers at the moment, I’ve had the opportunity recently to visit various regional boards of Realtors during their weekly “pitch sessions.” These are rather large meetings of local agents who come to present their clients’ properties to other agents in the area in hopes of generating interest or getting feedback which they can share with their clients at a later time. Obviously, I attend these meetings in order to promote properties owned by my clients. But, I stay through the entire meeting anyway to be polite. In the process, I get to hear the other agents “pitch” their clients’ properties to the group and sometimes observe some very interesting trends.

Most recently I attended meeting at various real estate boards where it seemed that agent after agent displayed enormous frustration at having been placed in the same impossible situation. Even though the meetings were in different parts of the county, the experience was roughly the same. An agent would walk up to the podium and say, “I know you’re probably tired of my pitching this same property over and over again, but none of you ever send me an offer. Why don’t you send me an offer?” To which someone will invariably retort, “Lower the price.” The speaker will then respond with the most outlandish of statements, “My seller has agreed to lower the price if he gets an offer.” The audience will respond with a mixture of giggles and stunned silence as the presenter leaves the podium and is replaced by the next agent to present. Now here’s where it gets interesting. Almost without exception, the next agent will pitch the property and then announce that his seller too has agreed to lower the price after receiving an offer. Not long after that another agent or two will share the same thing about their seller’s mindset.

While it may seem sensible to a seller to keep the price high in order to haggle with the buyer once an offer is made, in actual practice, keeping the price high has the simple and predictable effect of keeping an offer from ever being made in the first place. This is particularly true in a buyers’ market such as the one we are currently experiencing. The bottom line is that it’s darn difficult to haggle with a buyer that you haven’t got. Still, sellers will cling to that high price like a drowning man clinging to a leaky life preserver. But, when the air leaks out, no matter how hard he clings, the drowning man drowns. The same is true of sellers who cling to a high price while the equity in their home is leaking out in a declining market.

So, as your real estate dude, I’m here to tell you the hard truth. In a buyers’ market, price is king. It’s a hard pill to swallow, but it’s the truth just the same. If your home isn’t selling and you want to get it sold there is only one way to do it in this market: Lower the price.