Are Sellers Freaking Out?

Contributed by: Mark Zarichny on 11/1/2006

When it comes to pricing your house when you're ready to sell it, keep in mind you must sell in the market you're in today. All that matters is this: Whatever the last sale price in your neighborhood for your model, that's probably your sale price now.

When you're looking at what you'll gain on the sale of your house, let's keep it in perspective. If house prices increased year after year at 4 percent per year and then suddenly people were selling their houses for 1 percent less than last year's asking price, would that be reasonable? If so, then when property is moving up at 20 percent per year for several years and then suddenly you have to sell it for 5 percent less than the prices last year, would that be reasonable? The challenge is when we move from percentages to dollar amounts. If 5 percent represented $5,000, most people wouldn't blink. It's when 5 percent represents $25,000 that sellers start to freak.

There are stories from the field on how sellers are defending their prices as if their lives depended on it. While sellers are sitting on hundreds of thousands of dollars of equity, they can't stand the idea of dropping their price by $25,000 or $50,000 to sell it today. The house that was $260,000 in 1999 is now selling for $569,000 today. But some sellers now want that same type of appreciation and can't imagine selling it for less than $589,000. Bringing it down the $20,000 or $40,000 to sell the property seems, well, just not fair.

The market is like playing Russian roulette. Sometimes you don't know what you have until you pull the trigger. Somebody needs to blink. Sellers seem to be saying to buyers, "I'll drop my price, just make an offer." While buyers are blankly replying, "I'll make an offer, just lower your price."

For sellers staying in the same area, keep in mind, if you have to drop your price by 5 percent, then the seller of the house you're buying (usually a lot more expensive) is probably going to drop the sales price by about the same percentage point. It means that while you may "lose" money on the sale of your home, you'll more than likely "gain" it on the purchase up. The vast majority of sellers are not realizing this very important point.

Keep in mind, the market is the market. When it's time to buy, buy. When it's time to move, then sell. Work with the market you're in, not in the market you wish it would be. Now is the time to take advantage of the current Denver market and find a home greatly undervalued. In doing so, you would be well advised to take a second look at your asking price to ensure you are positioning yourself to take advantage of undervalued homes.

Mark Zarichny is the founder of Colorado Mortgage Network. He welcomes visitors to his Web sites at verysmartloans.com, realtyhowto.com and udebtfree.com.

To search the Denver MLS directly, go to www.ColoradoDreamHomes.net