As promised, here are two case studies of the cost of clinging to a false reality. Keep in mind that the listing agents in both cases may have been, at the very least, supportive of their sellers' costly denial. Seller number one listed his oceanfront condo for sale in April of 2006 for $630,000. After 60 days, he dropped the price by $50,000. A month and a half later he shaved another $40,000 off. Two months later, well into the slow fall season, the price was dropped another $50,000. Two months later, another $40,000 slice and the price stood at $449,000 where it stuck for six months until this week when it was dropped another $50,000 to $399,000.
Seller number two listed his oceanfront condo for sale in August of 2004 for $599,000 and raised the price in October to $649,000 . He changed listing agents in April of 2005 and dropped the price to $629,000. He dropped the price again four months later to $599,000 where it stuck until December when the unit was pulled off the market. It sat empty until August of 2006 when it was again offered for sale, this time for $569,000. One month later the price was dropped to $549,900 where it remained until February of this year when it was dropped yet again to $499,000. April saw a drop to $479,000 and in May it was lowered to $459,000. June brought another $40,000 haircut and today the price is at $419,000. To add insult to injury, this seller has been paying over $10,000 annually for condo fees and taxes while chasing the market down. Mortgage payment, if any, is in addition to that.
Both of these sellers obviously thought that their original prices were reasonable. If either didn't have to sell, as I hear all the time from obstinate sellers, they wouldn't be offering their condos today for 35% below their original asking prices. Seller number one was a little late in getting his unit to market but could probably have gotten more than today's asking price had he seen the light earlier. Seller number two had plenty of time to price correctly and walk away with a healthy profit early in his listing history but he clung to his wrong opinion of the worth of his unit and will now be lucky to net the $380,000 that he originally paid for his unit in 2003.
Moral of this story: If you're selling, make an effort to separate your personal opinion of your property's worth from the market's opinion. A little pain now may be preferable to a lot of pain later. If a prospective listing agent is willing to take your listing at more than their recommended asking price, you may be shooting yourself in the foot to hire them. As my wife is fond of telling me, it is what it is, deal with it.
One last note; If you think that the new property tax reforms are going to turn the market around, you may want to put the Kool-Aid down. My fellow Realtors, for the most part, seem to be hanging their hats on a market bounce once the tax changes take effect. I think that that may be wishful thinking. Craft your selling strategy carefully and seek advice from multiple sources. As always, question everything.