From Too High to Too Low?

A Tale of Two Homes

Where: 29xx Benton Blvd, just southwest of Minneapolis' Cedar Lake

What: 4 BR/4 BA; 3,100 FSF Colonial built in 1939

How much: sold for $641k (July '09); originally listed for $925k (April, '08). Tax assessed value: $849k.

Not convinced that overshooting on asking price can boomerang on a Seller (especially in a declining market)?

Consider this classic, 1939 Colonial just southwest of Cedar Lake, in Minneapolis' Sunset Gables neighborhood ("Exhibit A").

Originally listed at $925k in April, '08, it suffered six price cuts totalling $225k over a 13 month period -- capped by the biggest one of all: a $59k discount from the last asking price of $699.9k.

Ultimate sales price: $641k.

Three blocks west, my clients listed their very similar, 1937 Colonial at almost the same time -- Spring, '08 -- for $875k. Call it "Exhibit B."

Based on the feedback and showing activity, after a month on the market, I advised (and my clients agreed) to cut the price to $829.9k.

Six weeks later, they had a signed deal, and two months after that (Aug, '08), they closed.

Selling price: $790k.

Hot Listing . . or Hot Potato?

Be Careful What You Wish For -- RE Version

I got a courtesy call from an acquaintance the other week to let me know that they were "going to go with another Realtor" (yes, it happens -- even to me!).

I knew the owner was contemplating selling, but didn't know when, and also knew that one of their neighbors and close friends was a Realtor.

So it wasn't exactly a shock.

And believe it or not, I do appreciate such calls, because: 1) you like to know where you stand; and 2) it gives me a heads up on an upcoming property that one of my Buyers may be interested in.

Whatever disappointment I was harboring quickly turned to relief when I saw the home's listing price today.

In a word, "Yoww!"

The price is easily 25% over market, and going toe-to-toe with at least 3 other, similar properties literally priced $100k-$200k lower.

The homeowner's chances of selling for anything close to their asking price, in this lifetime: zero. At least IMHO, as they say ("in my humble opinion").

In the meantime, you can speculate that a couple things will happen.

The owner will get increasingly annoyed that "nothing's happening," and suspect that the Realtor "isn't doing enough" (on this second score, they may even be right -- see below).

The Realtor will get increasingly annoyed with the Seller, whose inflated expectations defy all manner of negative feedback.

The Realtor's time and marketing dollars -- assuming they intend to commit any -- will be wasted, because the property is unsaleable.

And the home's time on the market will steadily mount, making prospective Buyers even more critical -- and aggressive on their offer price (assuming they offer).

As Realtors like to say, "if I can't be your first Realtor . . . maybe I can be your last."