Chasing the market?

Hello ThinkLiveBe readers!  I’m Jeanette Dixon and I’ve joined the ThinkLiveBe team.  I am a Realtor at Keller Williams and love Downtown Orlando. I plan on stopping by from time to time adding my 2 cents and hopefully something interesting.  Today let’s talk about “chasing the market” and how it applies to real estate.  The concept isn’t complicated.  The market value of a property is $x so it should be listed below $x to stay ahead of our current market conditions.  If the property is not priced properly then as the market declines, price reductions on the property lag behind.  The property is now chasing the market and will cost the seller a considerable sum of money.  Real world example:  Against the listing agent’s advice, Seller Smith listed their home above market value to “test” the market.  The home was in great condition and a good neighborhood, the listing agent provided comprehensive marketing, online & print, as well as open houses.  Price reductions were agreed upon but never caught up with the market and the listing was withdrawn. Two years later, Seller Smith is now motivated and is listening to their listing agent. The home is put on the market just below market price, which has dropped in the last 2 years, and enters into a contract after 22 days on the market.  Sale price is now $40k less than recommended list price in 2008 – chasing the market cost Seller Smith $40k.  Don’t be Seller Smith.