THE 2013 BUYER MINDSET: It’s been on the market for how long? What’s wrong with that property?
One of the surprising home buyer thought processes that i encounter on a regular basis, is the following:
WHY HAS THIS PROPERTY BEEN ON THE MARKET FOR SO LONG? WHAT’S WRONG WITH THIS PROPERTY?
In today’s world of technology, instant gratification, and scarcity driven sales models(see apple product launches),
buyers in all business want the latest and greatest. This is especially true in real estate!
I have seen this scenario play out several times. It is usually coincidental, however most home owners who have their home for sale list much higher than fair market value for their property in order to “see if we can get more”.
Often times, these same home owners have a “wait and see” attitude when it comes to price adjustment.
After several weeks of no showings/offers(despite marketing and property exposure), the home owner will “get the message” that they have priced themselves out of the market. They then, reduce their asking price and begin “chasing the market”.
Real estate purchasers today, are far more informed about fair market value then they were even 5 years ago! A property which is overpriced to them, even if its only a few thousand dollars, will get little or no activity! After today’s buyers see a price reduction(after several weeks of the property being on the market), the automatic assumption is “NO ONE BOUGHT IT, SO THERE MUST BE A PROBLEM WITH IT”.
This all goes back to the concept of supply and demand, however more specifically, the psychology of SCARCITY. Take diamonds for example. They are formed and made in limited numbers, therefore they are SCARCE and thus difficult to obtain. This scarcity, causes the average man or woman to want it more, as we naturally ALWAYS WANT WHAT WE THINK WE CAN’T HAVE. This mechanism drives up the perceived value of the item, thus increasing its desirability.
If you have a great piece of property, and you list it too high, it is simply common. It is like the rest of the overpriced properties on the market and is perceived by buyers as ABUNDANT and COMMON. IF A PROPERTY IS PRICED CORRECTLY OR EVEN SLIGHTLY BELOW ITS MARKET VALUE, BUYER’S WILL PERCEIVE IT AS A RARE, WELL PRICED PRODUCT, AND WILL RUN TO SEE THAT PROPERTY!