We have mentioned more than once that when we are looking at homes with potential buyers, we are finding a lot of overpriced homes listed for sale on the market. To illustrate this point, we'll borrow from the classic line about relationships, "You can be right, or you can be happy." Without trying to sound too harsh, for some sellers in our current housing market it may be more appropriate to say, "You can be right, or you can get your home sold."
What do we mean by that? We see some sellers become so fixated on what they think their home should sell for, they become unwilling to bend to the reality of the market staring back at them directly in their face. They seem determined to prove they are right, usually making the bold proclamation they will never lower their price below "x-dollars." Unfortunately, the cold reality often is, their home is not going to sell until they come down on their price. So they have a choice to make. They can be right, or they can get their home sold.
In fairness to homeowners trying to sell their homes, we understand how easy it is to believe your home will sell for top dollar and in a reasonable time frame. As we have stated in the past, determining in advance the most likely price at which a home will ultimately be sold is no easy task, in large part because pricing in the housing market is opaque. Simply put, a home is only worth what a knowledgeable, willing, unpressured buyer will pay to a knowledgeable, willing and unpressured seller. It is where reality often enters the equation.
This is why it is not only important to get an honest assessment of your home's condition, features and marketability, but to make sure you have an accurate understanding of the current market and how to use market statistics to guide your pricing strategy. With about 7,000 hungry, licensed real estate agents working on commissions in Lee County, a seller will have no problem finding an agent who will tell them exactly what they want to hear, but that does not necessarily make it true.
Here is what we are seeing on the ground every day, as we go in and out of homes with buyers. Their single biggest problem is finding a reasonably-priced home to buy, while they seem to have no problem finding a lot of overpriced homes listed for sale. We know that may come across as a somewhat vague description, but when a home is reasonably priced, most buyers know it almost the instant they walk through the front door.
From a seller's perspective, it is important to realize there is a lot of buyer interest in Cape Coral and Southwest Florida, and the vast majority of the buyers we talk with have come to the realization they are not going to be able to "steal" a nice, clean, well-maintained, move-in ready home in our market at bargain basement prices anymore. They know those discount days are long gone and they are not coming to town expecting a seller to "give their house away." But at the same time, most buyers are also acutely aware of the difference between getting a reasonable value and overpaying for a home.
Put another way, the odds of sellers listing their home at too high of a price and finding a completely uninformed, out-of-town buyer for their home are pretty remote, in large part because of this thing out there they call the Internet. However, that doesn't seem to prevent at least some sellers from significantly overpricing their homes, thinking they are the one holding the lucky scratch off ticket of a home.
It is pretty common to see homes listed for sale at 10 to 15 percent above what they ultimately sell for, and in that scenario, it will usually take at least one, fairly sizeable price reduction to attract an offer from a buyer. In fact, it is not uncommon to see some homes finally sell for 15 to 25 percent below the seller's original asking price. This goes back to receiving an honest, realistic assessment about your home, so you can avoid ugly surprises.
When a home is reasonably priced in Cape Coral, especially if it is priced somewhere around $300,000 or less, it will go under contract with a buyer in 30 days or less, and often within several days or weeks of being listed for sale. The closing price in this situation will almost always be within 5 percent of the list price, if not at full price.
One morning within the last month, we were showing a cash buyer an older, remodeled home listed for about $300,000. We found some flaws and shortcuts in the remodeling job, so the remodel was not perfect, but compared to other similar homes, this had "reasonably priced" written all over it. Later in the afternoon we called to go back in for a second look and it was already under contract, with a cash buyer for above list price. This home was on the market for less than 5 days, yet another similarly priced home we looked at had been on the market for over 5 months without an offer. You can be right, or you can sell your home.
In another situation, a seller who was shown how they could get above $500,000 for the home, found our price analysis to be completely inept when we told them they might be lucky to get what they bought the home for in 2004, which was around $400,0000. After over 2 years on and off the market, through multiple agents, the home finally sold for under $400,000 and 26 percent below their original list price. This happens more frequently than it should, because, as we said earlier, you can always find an agent who will gladly tell you what you want to hear.
In another case, a recent headline read, "Condo Sale Shatters Naples Record," as an 11,698-square-foot penthouse condo with incredible views of the Gulf of Mexico sold furnished for $14,750,000. According to the report, this shattered the record sales price for a Naples condo, which was set in 2014. The condo was on the market for about 14 months before going under contract and the original list price was $17,995,000. So it sold for $3,245,000 less than the list price, which is a difference of, you guessed it, 18 percent.
So even in Naples, it looks like you can be right, or you can get your home sold!
(Information for this article was obtained from the Florida Realtors Multiple Listing Matrix for Lee County and it is believed to be reliable. The opinions expressed are those of Bob and Geri Quinn, and they are subject to change without notice. The Quinns are a husband and wife real estate team with Century 21 Birchwood Realty Inc. in Cape Coral. They have lived in Cape Coral for over 37 years. Geri has been a full-time Realtor since 2005, and Bob, who also holds a Certified Financial Planner designation, joined with Geri as a full-time Realtor in 2014. Their real estate practice is mainly focused on Cape Coral residential property and vacant lots.)