One word: greed.

Jo

A lot of people price their homes for what they want to get out of the home, not for what the market will bear. Totally wrong strategy, but employed by many. The buyer doesn't care what you need to get to move up or on, they care about what the home is worth in today's market.

I think too many people watch all those HGTV shows and see modest houses selling for ginormous sums in certain locations and figure their modest house in nowheres near a hot market should be worth near as much.

Some buyers need the cash to get out of the house. They paid XX and they need XX to pay off the mortgage, realtor and fees. As mentioned above the prospective buyer doesn't care, but the seller certainly does.

Some people feel THEIR HOUSE is worth a lot more than YOUR house. They love having a real tiger skin ceiling and it cost a fortune to install dontcyaknow... so everyone should love it and pay for it.

Sometimes people have just not caught up with the market and are chasing it down.

I do find it difficult to believe everyone in a neighborhood has for years ignored comps and listed at 20-40% more than selling prices. Either the realtors need to be more assertive when telling a prospective seller what their house is really worth, or the sellers in your area are all in lala land, or, it is one house that is being unreasonable and not an entire neighborhood.

I agree with all posts.......
Sellers believe that they their home is worth XX when in reality is worth less..I think its the realtors job to put things in perspective, so these homes won't sit on the market for months.

One home in my area has been on the market for two years......they had 5 different RE co. ITS PRICED TOO HIGH!! Rumor is the sellers don't want to budge with price, so whose fault is that?? If a home is not priced correctly and will not sell.....
Maria

Some people may have unrealistic ideas about the house. My dad's house is an 1880's Victorian in a small New England town. The town has recently become a hot spot for people from Boston, which is about 1.5 hours away.

Similar houses on Dad's street have been selling for $350,000 to $400,000. Dad's real excited to sell the house he bought in 1976 for $45,000--he thinks he's going to get $400,000 for it.

But the house still has the kitchen and bathrooms that were remodeled during the '50's. The wallpaper in most rooms was there when we moved in and isn't in great shape. The trim in every single room is chipped or peeling. The wallpaper is peeling in some rooms. The linoleum in the kitchen has a hole. The formica countertops are burned and warped. There is asbetos in the cellar and most of the paint is probably lead paint.

Dad doesn't care how things look and thinks that people who do are nuts. He has rewired the whole house, there's a new furnace, new oil tank, and new gutters. The house works fine, but it's gone beyond shabby in a few places. He's going to get far less than he thinks for it. The houses that have been bringing in the high amounts have all been remodeled and fixed up.

Dad's interviewed a few agents, who have all suggested some minimal sprucing up--new countertops and flooring in the kitchen, removing some of the peeling wallpaper and painting. Dad won't hear of it. The new people will just come in and change everything anyway, so there's no need to change a thing just months before the house is sold.

But Dad's just going to have to learn the lesson the hard way.

Camlan, we're about an hour outside of Boston, a real bedroom community (train and bus to the city within 10 minutes), and have been having just the opposite issue - we're the ones being pushy about sprucing up, while other people are saying "new people will just come in and change everything anyway, don't bother"! But unless it's in a truly prime location and has a lot else going for it, who's going to pay a good price for a tatty looking house when the same money could buy them a house that looks nice and doesn't need as much time and money put into it right off?

Here, new construction is priced significantly higher than similar "used" housing, and I think some people are taking new construction for a basis of comparison when they should be comparing to used. Goodness knows it's tempting.

Re: tax assessments being deceptive, our house is assessed for almost 20% more than we could even THINK about getting for it. It's intensely depressing. The last assessment was at the height of the bubble when prices were out-of-control high, and assessed high to boot, but as prices have dropped like a rock they haven't reassessed. If we were staying we'd be appealing it. So I can see why people think their house is worth a certain amount, because the town/county/state "said so".

1-Some people are too greedy
2-Some people are clueless
3-Some people smoke too much weed
. .
. .
. .
. .
4-Oh, yeah, I almost forgot: Some people think their poop doesn't stink and should be wrapped in a lace doily, to be carried off by a dove.

Did I leave anyone out?

Sometimes sellers think that what they "NEED" to make from the sale is the same as market value. The two are completely unrelated.

Perfect example--I spoke with a couple about 14 months ago. I know what they could spend on their next house. Since I've sold several houses in their current neighborhood I know the value of it. It's not a neighborood that appreciates much and is actually pretty hard to sell. At that time I told them it was worth "x" amount. They told me they were nearly "upside down" on it. I suggested that they wait two-three years, pay it down, and then think about a new house. Didn't listen though. They went out and bought a lot and began building a new house late last year. Their current home came on the market yesterday. It's priced at 160,000. That's about $15,000 or more too much. They are offering a less than typical buyer's agent fee plus their agent is part-time and does very little marketing. If they get it sold anytime this year for anywhere near the listing price, I'll be stunned. We agents call this "buying a listing." Doesn't really benefit the seller in the long run.

Yes you did leave someone out. I'm not greedy, clueless, a drug addict or your crude metaphor.
I am trying to get for my house what some might think is too high - I'm only trying to minimize my losses. I have more into than I'm asking. I did not expect to have to sell so soon (1.8 years old). Its an acreage - not a developer acreage where infrastructure etc. costs are leveled out between the lots/homes but a small unattached acreage. It turns out to be much more expensive to try to put together than people realize. They see the developers prices and think I'm too high. Fact is developers have sub's and pricing that allow them to get things done for less. Plus while I didn't do anything ordinately fancy in the house I did do some things like put in geo-thermal heating/cooling.
I am going to lose money on this place - its primarily of how much.
But I'm know people think its priced too high.

Even if someone does want to make some money - so what? I never have done anything but lose money on real estate but don't have sour grapes for those that make money or want to.

Marys1000--absoulutely nothing wrong with someone trying to make money. Last time I checked it was the basis for our economic system. As an agent my problem is that owners of homes with a very clear market value become irrate when I tell them their "run down shack" is really not worth more than the pristine house around the block just because they need or want to make a certain amount.

It's difficult to price houses such as yours and get buyers to understand the value. I'll soon be listing such a house. My job will be to market it to buyers that appreciate quality construction and the costs involved with energy efficient homes, etc. Not easy, but can be done.

If I recall correctly you are FSBO? You absolutely need to make certain potential buyers understand the costs involved in construction of such a house. Do you play up the fact that it's not in a development with potential HOA fees, etc.? Do you provide information on the money saving geothermal system? I have geothermal in my own house. I know our heating/cooling costs are significantly less than smaller homes in our neighborhood using propane or electric. Is there a way you can show potential buyers that your higher priced house may actually cost them less than the lower priced development house? Maybe a spreadsheet listing the true costs of owning your home for a year versus the true costs of owning a typical development house? I would guess your RE taxes are lower as well. Do you use well water or a septic system? Those are other cost savers that you could play up.

Mary -- I know you're not setting your price out of greed, you're setting it out of the necessity to cut your losses -- but in effect you're setting your price for what you need to get out of the property and not setting it for what the market will bear. In today's market you're not going to get a price that won't be born out by the market

I had 3 different realtors tell us to list our house between $210,000 and $220,000. We KNEW it was too high. We had been following the market for 5 years and went to all the open houses to make certain we compared apples to apples. We listed at $190,000 and sold quickly...though as a seller at the time I thought it took forever! LOL

The 2 houses on my road that went up for sale within two weeks of us sat on the market all summer, into the fall and then into early winter. One house sold for $193,000 and the other just went back on the market last week. I think if they get $180,000 they will be lucky.

I am beginning to think there are many reasons:

1. Greed. Over the last 10 years since we moved in our county has been VERY "hot" in real estate markets. Glad we bought when we did, we made a good investment. But like everywhere it has slowed, but definitely still stable.

2. one poster mentioned: "tax assessments being deceptive, our house is assessed for almost 20% more than we could even THINK about getting for it."
It is definitely like this in our county. Our house is listed at being worth about $500K and I think we could sell it tomorrow for around $400K tops. What is UP with that? So I suspect that the owners are just taking the tax assessors word for it and that amount is NOT market value!

4. We are unincorporated and the comps are against houses that are in the much nicer incorporated (town) area. For what these people are asking - $350K in my unincorporated area, you could get the same house, maybe nicer, with same amount of property in town for that same money.

Thanks all!

Why all the insults?

Too many people think that real estate values ALWAYS go up. They don't. When my husband and I first bought 20 years ago we understood that if you weren't able to stay in your home 3 - 5 years you would probably lose money if you had to sell.

cmarlin20, the insults are posted here because "overpriced" home sellers always hold a gun to the head of prospective buyers, and force them to sign on the dotted line . Weren't you aware of that? Me neither :)

Some people just love their house. It is priced emotionally, not necessarily out of greed. If you have good memories, etc., you may not notice the dated wallpaper, shabbiness and so on. It's "your" house. I know when we went to sell, we were disappointed with the price quotes from the Realtors. We were able to get more realistic, but it's hard for some people.

Tax assessments are done on a periodic basis varying in time from town to town, county to county, etc. In my village, we are assessed every four years. In my previous town it was every ten years. Some towns assess every year but not many because it's too expensive. So, if your house was assessed in 2004-2005 it's going to be more than today's market value for many areas.

It's always been the "standard" that one needed to stay in a house for approximately five years in order for the property to have appreciated enough to cover sales costs. It's only been the past 4-5 years that some people erroneously got the impression that real estate was a good substitute for a savings program. Since this time-frame coincided quite closely with the tanking of the Nasdaq...I worry most about those people who, in disillusion with their stock portfolio's performance, pulled out of their 401(k)'s & put their savings allotment into an expensive home. If they have to sell at the trough of the real estate cycle, they will have taken another hit to their retirement savings probably larger than the Nasdaq hits they endured. I hope there's not too many that are in this position. But, I worry because a lot of money came out of equities during that time frame & it didn't go into savings accounts...and oddly enough...at about the same time, houses started selling like hotcakes.

Tricia

Good clarification triciae - the entire area was re-assessed last year. And as a result you are seeing lots of homes for sale (people deciding to cash out??). And we also have some lots of vacant land interspersed. All those lots are going up for sale also. Lots of folks got nailed by the property tax assessor this year thats for sure.

I have my house up for sale and based on the comps my house is at the high end, everyone that comes through here absolutely loves it but a few have turned around and said it is overpriced. I find it amusing because the $$ amount difference between my house and the comps is less than $30,000 yet the comps would need more than $100K to be anywhere near the shape mine is in. If the price is too high why did you come to look in the first place? I have not been in my house long enough to be emotional about the sale, I want to move, bottom line, but I won't give my house away either. My tax assessment is also more than $100k over what we are asking, I don't think it is realistic to go by that # to price a house anyways. Tax depts usually have no clue.

My tax assessment is also more than $100k over what we are asking

If your tax assessment is that high it might be worthwhile to file an appeal. My house was built in 2005 and this year's assessment of Real Market Value was $150K over what I could sell it for. I appealed and got an almost $1000 reduction in my property taxes.

terriks- I am already in the process, I am counting the days until May 4th so it will be submitted to the town. My house was built in 1964, i think, but we renovated in 04. We were just being lazy about doing it prior to selling, I wish I had done it right away though.

terriks and im2oc4u - did you do the appeal yourself or with a lawyer? We are thinking of doing that as well. I am hoping for more than $1k reduction, especially if we have to use a lawyer. I don't know how realistic that is though, so I am checking it out. We got something in the mail about it a few weeks ago from a local law firm.

I appealed by myself. I contacted the county assessors office and they supplied me with the necessary information and forms. In my county there is a limited time period to appeal. You can get a RE agent to help you with a market analysis. You do need to go in with statistics, not just a general idea of what you think your assessment should be. You also need to know what figure your taxes are based on. In my county we have a RMV (Real Market Value) and AV (Assessed Value). Our taxes are based on the AV. In my case I think my assessment was so high because my entire neighborhood is new construction, with some of it being very high end. The house across the street sold for almost a million dollars, but our home, while not a lot smaller is much more modestly finished. For example, they have an elevator and tons of high end finishes. I brought in comps of homes that sold during the assessment period that were much more comparable to mine and the board agreed with me.

Thanks Terriks. It sounds like this might be more than I can take on by myself at the moment especially if there is a time limit. It might not be a bad idea to use this firm.

If this firm is sending out unsolicited offers to help you with your appeal I wouldn't trust them. Sounds like they are trolling for business. How much over assesesed do you think your property is? It would have to be considerably over assessed to cut your tax amount by $1000. My assessment was $150,000 too high. It wouldn't take a RE agent long to come up with comps to help you out.

In my neighborhood, I think it's due to sheer denial.

Everyone seems to think that their house is worth what that house down the street sold for two years ago, at the peak of the booming market. Nobody wants to admit that their house has "lost value" and is now "worth" $100K less. Even though they could probably still clear $200K over what they paid for it 5 years ago. I suppose it's a little greed mixed with denial.

There have only been two homes for sale in my neighborhood in the past 18 months, and one sold in maybe 9 months and the other took more than a year. The latter was a foreclosure that had been dropping the price over $150K during about a 6 month period until the sign came down about 6 months ago. Since the house was still empty, I recommended to my friend that she track down the agent and make a lowball offer (about $200K lower than original asking). She closed 10 days later. This past weekend, two more had open houses, so I have no idea how they're going to comp those houses. I can't find them in MSL either, so I don't know what they're asking.

Some people are delusional when it comes to their houses.
There is one house for sale in my town for almost 2 years. It's way overpriced. The owner thinks he can ask 250k more than it's worth because he remodeled it in 1994 ( one year after he purchased it-LOL) & because he lives next door to a millionaire. His remodel job is NOW DATED!
The house next door is not a million dollar house either, only the owner is.
How silly is that?

On another note- comparables are an interesting beast. Rarely another house is a true comparable. Unless you live in a neighborhood where the homes are identical in sqft & lot sizes & no alterations have been done, the other sold houses are not true comps.

In Florida, the sun exposure makes a difference in price. Eastern exposure is the most desirable & more money. Floridians are very happy when the snow birds buy up their homes with the western exposure (very sunny & hot)for the same amount as the homes with the eastern exposure. The snowbirds don't know the difference UNTIL they get their electric bill for gazillion dollars!

My point- the RE agents are real quick to call other homes comps when they're really not. It makes their job easier. However, if you're astute & would go through two homes, you would see BIG differences. The person selling the better home always gets $crewed.
All it takes is one desperate seller to sell low for whatever reason & the rest of the neighborhood has to deal with it when they sell. It's always better when the BEST home goes up for sale first, rather than the worst one. If there is no comps on the street they will take that house into another unrelated neigborhood & you could sell it for a better price. If the worst house sells first, the other homes will have to lower their price because of the horrid comp.

When I was getting ready to sell, a realtor was real quick to point to a comparable down the street. It sold for 485k in 2004 ( mine was in 2006). I told him the only thing we had in common was that we were built by the same builder, that's it. The other house was the first house coming in & the side of it was on a busy street. It was bare bones, no extras.
MIne was 450 sqft larger. loaded with extras & had a gorgeous view. When our house was built, it cost 120k more. I knew I couldn't ask 120k more, but c'mon we were not comps. A busy road devalues a house 50-75k less than a house on a quiet street. The sqft & extras....where was the allowance for that?
Long story short. I sold for a lot more than the other house way down the street (550k). I still din't sell it for enough because that house DID affect how much I could ask.

A very similar to mine on another street sold for 175k more (725k) because the other homes on that street sold for more. That house was riding on the bigger/nicer first homes sales on that street, while I had to tail the smaller sale on my street.

I think people ask too much because the standards are set by comps that are NOT comps. Also, if you're paying a lot for your new purchase, you feel that you should get more too.
A builder told me that to build my house that I was selling would cost 100k more than what I sold it for. Me thinks my buyers got a good deal ;)

comps are a scam, just for the reasons stated above.Well put by dabunch...and comps don't take into consideration many "minor" upgrades,which in actuality enhance the value of a home..Comps should be looked at with a jaded eye, and unless a purchaser actually walked thru the comp, it serves little purpose..JMHO, and i am certain the resident realtors will take me to the woodshed for such comments :)

Long story short. I sold for a lot more than the other house way down the street (550k). I still din't sell it for enough because that house DID affect how much I could ask.

A very similar to mine on another street sold for 175k more (725k) because the other homes on that street sold for more. That house was riding on the bigger/nicer first homes sales on that street, while I had to tail the smaller sale on my street

Maybe I am naive but I just do not get it. If it is all the same neighborhood, sold in the same market, same size, same lot size, exposure (if that is a factor), similar quality finishes and all the same zip code and school district (assuming that is a factor where you live) and the blocks look about the same, then either they got too much for their 725 house or you got too little for your 550 one or both.

You absolutely cannot compare the corner busy street house with one even next door let alone halfway down the street or a couple of streets away midblock. Any realtor that would suggest you should is an idiot. Comps are based on neighborhoods, not just streets unless the neighborhood changes from block to block. However if the neighborhood changes that much then it means that the houses are nicer on that particular block, whether the lots are bigger, houses bigger or finished more nicely or more nicely landscaped in some way. While there are always nicer streets, it is not because someone got more for the house or people have sold for more but rather because that street is nicer someone paid more to live there

Saphire-
It wasn't the same neighborhood, but it was the same town, within 3 miles distance. Actually, my house was in a better physical location.

The house that sold for 725k was the smallest on that other street, which was off an older neighborhood with smaller homes. Mine was one of the larger five homes on my street. Nothing better than mine sold on my street, except for the 2 worst homes on my street, so the comps weren't great for me.

The people who purchased the similar to mine, but more expensive home (725k)never looked at my home because they qualified between 700-800k. My house was for sale for 569k. Realtors usually don't bother showing homes for much less if you are qualified for that much. That's what a realtor told me.
Ironically, we (in the NE)got caught in a bad market bewteen Sept & Dec 2006. Only the homes under 450k and over 650k to a lesser extent were selling. The in between were not being looked at, or sold.
Where I live, we have a few neighborhoods.
Most of the newer construction (last 15 years)consists of one or two streets in between older streets. In our town we don't have much land left. Lots are at a premium, that's if you can find one.

My point was that "comps" can work for you or against you. It's not good if the first house on your street has to sell quickly & the owners need to bail & give it away. That sets the standard for your neighborhood.

I think comps should be done with a fine tooth comb, not just a colonial is a colonial. I can tell you stories from meeting with a few of the realtors, how they would start comparing 2 houses never being inside of them!

I don't believe that you should pay 175k more for the same sqft on another street, just because some of the surrounding homes may be valued at 700-800k. I can see the neighborhood carrying a house an extra 25-50k but not almost 200k. I definitely think that the other party got taken. I've been in that other house & it was not worth 725k. The realtors must have worked hard to get price.

To the OP- sometimes it works for the seller to list high. After all, realtors will show their house to a party that will be qualified in their price range, however skewed it may be.
The savvy buyers won't fall for it. But there is a $.... born every minute & they listen to what the realtors say ;)

"All it takes is one desperate seller to sell low for whatever reason & the rest of the neighborhood has to deal with it when they sell."
That is why the house down the street from me that I mentioned that is currently up for $350,000 is important to us.
It is the only water front property in our immediate area to have sold in the last 15 years! (People hang onto this stuff.) But the house itself it not a comp to ours in any way, it is a 2 bedroom, no garage (carport) and NO washer and dryer facilities. Those people must have gone to the laundromat all those years. The lot is .8 acre but half of the lot is in an area where it is too low to be built on. So a teardown would be very tricky to get permits for because of flood plain regs.
I tend to think that the realtor they employed is not doing his job either maybe because from what I am seeing, there are almost NO showings going on.
Also, it is difficult to get comps in our area. It was not a planned community and most of the houses started off as very small (600-900SF) cottages that had additions and additions put on them. So they are ALL different. Only thing that is the same are the lot sizes seem pretty regular.
Thanks for this discussion. Lots of things to consider if we ever put ours up for sale.

They overpaid to begin with.

qq, who says they overpaid to begin with? At that particular moment in time, that is what the home was worth,whether the underlying "true cost" value was something else..I love posters who claim 'inflated" values,etc, and how they have waited for the right time to buy,as if one can EVER call the bottom of the real estate market..And lets say for chits and giggles, that after waiting "patiently" for that RIGHT time to buy, 2-3 years have past, and your patience paid off,you saved some $$$..BIG deal, your life was on hold for that time..Life is way too short to worry about the day-to-day,month-to-month fluctuations in the market..

Thanks for that post, qdognj.
We closed on our new FL home in January to establish residency to start applying for the best schools for our kids in the fall. The magnet & fundamental schools start selection in February. Of course the market has completely dropped out since we bought our house and the neighborhood homes on the market are asking $50K-$100K even less than we paid in January. But I found out this morning that my middle school son got picked up off the waiting list for the BEST magnet program in the the county. Now ask me if the home is worth what we paid...DEFINITELY.

c9, congrats on the great news for your son...You purchased a "home" for the right reasons,not as some day trade.What it may or may not be worth today is so irrelevant.Until you NEED to sell, and you find a buyer, and you cash the check, who knows what the value is.Sure, you could have waited out the market like all the apparent bottom fishers,market timers that post here are doing,but when is the bottom? Will someone ring a bell and let you know? You have set roots, your child has a great opportunity in a great school.This is what home ownership is all about...Best of luck

The people that own the property I originally posted about did it, they finally lowered their price to $250,000.

And I went on the county tax database site and looked up their house and fair market value per the assessor is yep... $250,000.

WHY would someone put a property on the market for $200,000 more than it is worth and let it sit for well over a year?

I just don't get it...

* Posted by klimkm (My Page) on
Wed, May 9, 07 at 17:04

The people that own the property I originally posted about did it, they finally lowered their price to $250,000.

And I went on the county tax database site and looked up their house and fair market value per the assessor is yep... $250,000.

WHY would someone put a property on the market for $200,000 more than it is worth and let it sit for well over a year?

I just don't get it...

Greed my friend.

Also, for the last few years LOTS of people have been sitting around counting the "equity" in their houses like they would count dollar bills in their wallet. Instead of seeing their houses as primarily "shelter" they see them as part of their "savings." And every time they have to lower their price by a few thousand, they're feeling the pain of losing "their" money. A lot of people are just finding out that home equity can disappear as quickly as it appeared.

I should mention that this house is empty because the owners are deceased and it is the family trying to sell it.

It is your classic old person house, has not been updated since the 70s probably. A very minimal home, 2 br, 1 bath.

I think they have to split it at least 4 ways so they are trying to milk it. The Small cheap houses are selling very well here in IL as there are less and less of those in certain areas, because of chicagoland teardown mania. So the market is there for this home.