Sellers must lower prices in slowing market

By Melissa Wirkus

As the housing market continues to stall, many people find the most frustrating thing about the market is that it now takes a lot longer to sell a home. This is the same home that would have sold in one day about a year or two ago.

But the surplus of homes on the market and longer selling time could be the fault of the sellers themselves. This is because many sellers are expecting to unload their properties at last year’s prices, and are refusing to lower their listings.

This is causing many buyers to wait on the sidelines until they give in, thus further stalling our already slumping housing markets.

Now real estate agents are advising their clients on the fact that if they want to sell, then they have no choice but to lower their asking prices.

An October 24, 2006 article by Patrick Rucker of Reuters News Source, “Stubborn sellers could harm housing sector,” looks into how sellers must lower their prices to stimulate market activity.

“With stubborn sellers refusing to relent on asking prices, many prospective buyers have kept their hands in their pockets. Some industry observers fear that bull-headed home sellers could worsen a downturn by driving up the inventory of homes for sale and running off would-be buyers.”

The markets that will be most affected by this problem are probably going to be the markets that experienced the biggest growth and appreciation during the real estate boom of the past five years.

A lot of these markets have a huge supply of homes on the market and will not be able to get them sold quick enough, mostly because buyers will be waiting for prices to fall further.
Specific areas in California, Nevada and Florida will be very vulnerable to many sellers’ decisions not to lower the prices.

The people who do not want to budge on their prices are from every walk of life. They range from investors who were expecting big returns to regular homeowners who saw their neighbor’s identical home sell for way over profit a few years ago, and are not willing to accept anything but the same gains for their abode.

“‘Sellers have not caught up with the reality of the marketplace despite the proliferation of 'For Sale' signs,’ said Howard Glaser, a mortgage industry analyst with the Glaser Group in Washington, D.C. ‘There is a lag period between sellers' expectations and the reality of the marketplace,’ he said, and shaking them out of their high-price fantasy ‘is more psychology than science.’”

Despite the longer time it takes to sell a home with an inflated price for our current market, many sellers are not relenting. Now, agents are tending to stray away from these types of listings, since they are often a waste of time.

“‘I try not to list those properties,’ California Association of Realtors President Vince Malta said of the overpriced homes. ‘You could do that last year and someone would still come in and make an offer,’ he said. ‘Back then, we were all marketing geniuses.’ But those once-hot markets have changed -- even if the mentalities of some would-be sellers have not.”

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