The real estate market is better than it has been in years. There's hardly anything for sale. So you decide to sell your house.
While you're trying to figure out how much to ask for it, you also think about how much you've loved it. You know there's nothing to buy out there and here's one beautiful house for sale.
It sits there for weeks without any offers. Why?
Even in this boom real estate market, with area agents seeing fewer houses for sale than ever before, dozens upon dozens of nice houses are sitting on the market unsold from Bowie to Centreville. And nine times out of 10, agents say, the problem is they simply cost too much.
"If a home doesn't sell in the first 30 days in this market, it's unquestionably overpriced," said Marc Fleisher of Long & Foster, the top-selling agent in the Washington area.
"If a house doesn't sell in 20 days, it's overpriced," insisted Greg Holmes, an agent with Century 21 Laughlin. "I've looked at my numbers for the first six months of this year. All the houses I sold went either in the first 20 days or between 45 and 60 days, after I had dropped the price."
If it's all so obvious, and everyone knows it, how come all these houses are sitting there unsold, sometimes for months?
"Sellers are getting awfully greedy," said Holmes, who works in his company's Vienna office. "You're seeing that across the board. They're hearing stories [about the high prices others are getting]. They're talking to friends. And they're unrealistic."
"It's human nature to try and go as high as possible," said Barbara Lewis of Long & Foster's McLean office. "We do the same thing when we price our own homes."
Whether human nature or just plain greed, agents say many sellers are shooting themselves in the foot with their high asking prices. Many times--not always, of course--the houses end up selling for less than they would have otherwise. They sit there too long, and the perception that they're overpriced is hard to live down.
Wait a minute. Shouldn't you price your house as high as possible and just wait for this sizzling market to reach you?
"Absolutely not," Fleisher said. "You should price it just under what you want. Then you stand a good chance of getting multiple contracts. And selling it for more."
"It's a perception problem," he said.
Fleisher explained what happened with a recent listing: "I just got a house that I took over from another agent. It had languished on the market for about six months. It was a great property, just incorrectly priced. The sellers had turned down offers in the low-$800s because they weren't prepared to address the market."
Fleisher said he ended up selling the house in the mid-$700s. "They could have easily sold that house in the mid-$800s," he said. What happened to Fleisher's listing is an example of what many agents say happens to overpriced houses: They end up selling for less than what they're worth because of initial overpricing.
"They just weren't realistic," he said.
With a market this brisk, agents say, buyers get suspicious when houses sit there for too long. So the idea of waiting until you get your price isn't good strategy, they say.
"Once a house sits and sits, it becomes stale," said Suzanne Goldstein, another top agent with Long & Foster in the District. "People start worrying there's something wrong with it. Let's face it: People love competition. If I'm looking at a dress, you're going to want it too. It's the same with houses."
Holmes goes as far as to call a house that has been languishing on the market a "death trap."
"Even if you go down to the correct price, you have to overcompensate at that point," he said. "And the house will sell for below what it's worth."
Sellers also are coming up against buyers who are more sophisticated than ever, agents report.
"Buyers are smart nowadays," Fleisher said. "You don't find that many buyers who just walk in for a day or a week. Almost all the buyers looking now have been in the marketplace for a month to a year and a half."
Besides time spent in the market, Washington area buyers also seem to have done their homework. And their homework is telling them to be careful of today's prices.
"Buyers are sophisticated," said A.G. Sabban, who owns AGS Brokerage in the District. "Almost everyone has a friend that's a Realtor. Everyone's on the Internet. They're just not prepared to overpay. A lot of these sellers are not getting the prices they think they should."
Consider what happened to Sue Huckaby's listing on Military Road in North Arlington: The three-bedroom original rambler on the busy suburban road went on the market a few months ago for $449,000. Nobody was interested. She dropped it to $419,000. Still no takers.
Last week Huckaby lowered the price to $399,000--$50,000 less than the original asking price. A buyer made an offer within two days.
"My dilemma is, 'If I had started at $410,000, would we have sold much quicker?' " asked Huckaby, an agent with Weichert Realtors. "But a lot of sellers want to try and get as much as they can."
Huckaby said she has "pushed the price envelope" as much as possible in her sales. She says agents have an obligation to the seller to get the best price they can.
"I'll go in and suggest a price range," said Huckaby, a top Virginia agent. "But almost all the time, the seller wants a higher number than in my range. You have to try and guide the sellers."
Area agents report that some agents aren't guiding their sellers at all, however. Instead, they're using whatever price the seller asks, even if they know the house won't sell for that, in an effort to get the listing.
This practice, called "buying a listing," can be risky because sellers often blame agents when they can't get their price--and then dump the agent.
"A lot of the fault in overpricing is the agents not giving their sellers good advice," Goldstein said.
And once you set a bad price, it's not always easy to get the seller to come down.
"It's always so difficult to get a price reduction from the seller," Holmes said. "If you don't get it right the first time around, you're blamed and they change agents. It's not the agent's fault, though. It's the pricing."
The more successful agents say they are shunning overpriced listings. It's just too much work, they report, for not enough gain.
"The most successful agents will not belabor themselves with overpriced listings," said Fleisher of Long & Foster. "We've said no to quite a few houses. We very rarely take on a listing that we feel is overpriced."
Agents say that anything more than 5 percent over the home's realistic sales price is overpricing. And 5 percent is already a lot. Anything priced over that percentage, buyers shun completely, they say.
"For a house priced less than $300,000, you price it 5 percent too high and nobody will buy it," said Sabban of AGS. "For a house priced at half a million, even 3 percent would make a difference."
"A home that is new, or newish, like within three years, is on a fabulous lot and is not near a main road, can maybe be priced a little higher because of the shortage of homes," said Lewis of Long & Foster. "For older homes, buyers are scrutinizing these purchases more. Although they may want a home in the area they're looking in, they're also looking closely at the comparables and recent sales."
So agents often find themselves caught between a rock and a hard place.
"When I tell sellers what I think the value of their house is, some say fine and let's go for it," Lewis said. "Others get very tense and annoyed, if not downright angry, wrap up our meeting and that's the end of me. Another agent may come in and go with whatever the seller wants. Sometimes I feel like I'm just helping my competitors when I price a house correctly."
And the problem is, agents say, that pricing is not an exact science--especially in this market.
"It's the hardest thing you do in real estate," said Huckaby, who has been selling houses in this area for more than two decades, "because you're dealing with people's pocketbooks, their egos and their emotions."