THE DANGERS OF OVERPRICING
By Yalile Alpizar, President, Costa Rica Luxury Estates
The big mistake in trying to sell luxury real estate starts right from the beginning of putting the property in the market… it has to do with OVERPRICING.
Costa Rica is characterized by a real estate market where in theory everything is for sale if the right price is paid. This is what most buyers are told when they are putting their house on the market. Then we have the fact that there is more inventory of houses for sale than buyers who can actually qualify to purchase those homes. The equation is then more sellers competing for fewer buyers.
There is a myth that sellers have to face from the very beginning if they are truly interested in selling the house at the right price on a timely basis, this is: “"The initial listing price isn't that important because the price can always be adjusted down later."
This is NOT true, and the fact is that buyers loose a lot of time and effort along the way before they find out their big mistake.
The other myth is that most buyers do not come to see a luxury home because of the adds they saw in newspapers, magazines, a sign in front of the house, or the internet. The fact is that most buyers of luxury homes contact a real estate agent that knows the current inventory and would pre-qualify the properties that could fit their needs.
Buyers of luxury homes are very specific regarding their requirements and would not loose their time looking at homes that would not meet those requirements. Their time is very valuable. They would normally depend on an agent to represent them.
Buyer's agents look at the needs of the client, where the client wants to live, location, condition, and other details of the property...
And most importantly.... ...price.
If your house is overpriced, agents are going to show similar homes that are priced more attractively. Your listing will get passed over.
Agents pay MOST attention to homes newly on the market. There are fewer NEW listings than current listings. It is easier to keep an eye out for what is NEW, compared to the vast number of current listings.
New listings are on the "hot" sheet circulated in real estate offices. The MLS computer identifies new listings. Your listing agent may hire a service to distribute fliers to all the buyer's agents. There are office previews and MLS tours to showcase new listings. A lot of attention is focused on what is NEW.
With agent's looking at newly listed homes so aggressively, a properly priced home gets attention.
An overpriced home gets passed over.
By Yalile Alpizar, President, Costa Rica Luxury Estates
The big mistake in trying to sell luxury real estate starts right from the beginning of putting the property in the market… it has to do with OVERPRICING.
Costa Rica is characterized by a real estate market where in theory everything is for sale if the right price is paid. This is what most buyers are told when they are putting their house on the market. Then we have the fact that there is more inventory of houses for sale than buyers who can actually qualify to purchase those homes. The equation is then more sellers competing for fewer buyers.
There is a myth that sellers have to face from the very beginning if they are truly interested in selling the house at the right price on a timely basis, this is: “"The initial listing price isn't that important because the price can always be adjusted down later."
This is NOT true, and the fact is that buyers loose a lot of time and effort along the way before they find out their big mistake.
The other myth is that most buyers do not come to see a luxury home because of the adds they saw in newspapers, magazines, a sign in front of the house, or the internet. The fact is that most buyers of luxury homes contact a real estate agent that knows the current inventory and would pre-qualify the properties that could fit their needs.
Buyers of luxury homes are very specific regarding their requirements and would not loose their time looking at homes that would not meet those requirements. Their time is very valuable. They would normally depend on an agent to represent them.
Buyer's agents look at the needs of the client, where the client wants to live, location, condition, and other details of the property...
And most importantly.... ...price.
If your house is overpriced, agents are going to show similar homes that are priced more attractively. Your listing will get passed over.
Agents pay MOST attention to homes newly on the market. There are fewer NEW listings than current listings. It is easier to keep an eye out for what is NEW, compared to the vast number of current listings.
New listings are on the "hot" sheet circulated in real estate offices. The MLS computer identifies new listings. Your listing agent may hire a service to distribute fliers to all the buyer's agents. There are office previews and MLS tours to showcase new listings. A lot of attention is focused on what is NEW.
With agent's looking at newly listed homes so aggressively, a properly priced home gets attention.
An overpriced home gets passed over.
Nice blog...!!! Keep posting like this,due to people like me grab the chance to learn and make implements...Thanks
ReplyDeleteComments from owners in reply to this article :
ReplyDelete"Respect your thoughts on pricing but would then consider taking a portion of the land out of the sale. Thank you"
"This market is looking like the US two years ago. When people finally realized that if they wanted to sell they would have to take a loss. The inventory in the States has now slowed in the better areas that I watch, so it looks like Costa Rica is three years out. Thanks for the update. I will try to get with you next week to consider whether I want to remove my house from the Market or drastically drop the price. I may also consider rental. Thanks,"
Comment sent by another property owner today:
ReplyDelete"I do agree that the market decides price not the seller. As you well know, in a seller's market sellers can get better prices and in buyer's market buyers get better prices. And as you well know, location location location also has a big impact on price.
One can do a comparable sales analysis to estimate a market price. At the other end, if there are no buyers or too few buyers, a comparable sales analysis would not be valid. So how would one establish a starting price? If a seller is desperate to sell or must sell rather than lose his initial equity, this still does not represent a valid market price because it would be a price that is below market.
I do agree with you that house prices in Costa Rica are extremely high for a less developed country like CR with so many infrastructure and public services defficiencies."