The Mind of the Seller. Over-priced Home – Day 1 to Day 360
2024 Over-priced Homes in Paradise Valley. In 2021, 2022 and 2023 home prices were rising so fast that even homes that were initially over-priced eventually became a fair value. Those times are changing. Let’s look at the how homes become over-priced in the first place. Then how you, as a Paradise Valley or Scottsdale home buyer can purchase a great home at a great price.
“How do Paradise Valley Homes get Overpriced in the First Place?
In the article below, I will share 5 (five) key insights #1. How Scottsdale and Paradise Valley homes get priced over market value. #2. Behind the scenes negotiating with seller’s agents on these homes. #3. Understanding, “The mind of the home seller”. Pricing their homes substantially OVER comparable sales. #4. Show the journey of an overpriced Paradise Valley home or Scottsdale from listing to sold. #5. When is the best time to make an offer on one. #6. Lastly, what over priced Paradise Valley-Scottsdale homes eventually sell for. You may ask yourself. Do they end up selling for more or less?
Will an Over-priced home sell and to who?
First and foremost, it is important to note that with very little exception. Homes of equal size, age, floor-plan, construction quality, similar finishes, equal views, lot size in a like area will sell within a predictable price range. There are only two real exceptions to the following rule. #1. A home buyer makes a hasty purchase without fully studying the market. #2. Buyer is working with an agent who does not properly counsel the buyer about the market and current home prices. 2B. Agent counsels client but the buyer decides to proceed regardless of counsel. #3. A variation on number one occurs. In this scenario. A buyer comes to Paradise Valley Arizona from a higher priced market. Example being Los Angeles CA or Manhattan NY. In this instance. Home prices may look so attractive, the home buyer may ignore comparable ‘sold’ homes prices and overpay for a home.
Equity is Achieved at Purchase in Paradise Valley
As an illustration of this. I spoke to an individual a week ago from San Francisco. This buyer paid almost full price for a home 6 months ago that had been on the market in Scottsdale for over a year. He paid approximately $80,000 over market value. Sadly, he decided to move back to San Francisco. Then wanted to re-sell his home for the amount he paid for it. I kindly wished him luck. I passed on pursuing the listing. Sadly, his error will be a $125,000 mistake after commissions. So are ‘ Unicorn buyers’ out there? Yes, but I never suggest sellers wait for them. And recommend buyers be “market aware”.
Who Determines the Listing Price for an Over-priced Home?
Scenario #1. A home seller loves, loves his house, and believes his house is the best house in the whole neighborhood. “Not only is his home the superior home in the whole neighborhood, but the house around the corner is “listed “for 1.2 million”. So if the neighbor has an ‘inferior home’ listed for 1.2 million. The seller with a ‘superior house’ must be worth 1.4 million. Now in this scenario. The seller’s belief in his home’s value is as strong as his belief in knowing his name. Recent sales and statics will be immaterial to this seller initially. So there are three issues here #1. First the neighbor’s home is “for sale” not sold #2. The neighbor’s home may also be overpriced. #3. The seller is not factoring in actual ‘sold home prices’. Instead using home prices of ‘active‘ Paradise Valley or Scottsdale homes.
If you are reading this and this seller’s approach to home pricing sounds crazy. Trust me it’s true. It happens all the time. In 2024 Over-priced Homes in Paradise Valley Return. Including Scottsdale Homes.
What is fascinating to me is. Many of these home sellers are very nice, brilliant individuals, doctors, CEO’s and successful business owners.
Factors going into Determining List Price for an Over-priced Home
Scenario #2 A Home seller looking to get a high number for his house meets with several Real Estate agents. Each agent meeting with the home seller ascertains fairly quickly, the seller is the ‘type’ “looking for a high number. Even the newest agents understands, “if you tell a seller, (who thinks his house is worth more than everyone else’s) a realistic ‘list price’. There is a 97.5% chance the “honest “ agent is not getting the listing. These types of sellers are looking for “validation” on their pricing thoughts. If an agent vying for listing insinuates the number is ‘too high”. That agent is out of the running for the listing. There is no reward for honesty in this case. In this case, the real estate agent that obtains the listing has agreed to #1. list the home at sellers preferred price. #2. Told the seller what they wanted to hear in terms of home presentation. Or may have made a few suggestions they knew would be acceptable to home seller. The net result is – 2024 over-priced homes in Paradise Valley.
The Favorite Niece Component of Determining List Price
Scenario #3. A home seller meets with a Real estate agent. The agent may be newer or now days there are many, many individual’s becoming part time real estate agents. Individuals looking to make money on the side. These part time agents solicit their friends, parents at their children’s school, buyers and sellers at their husband/wife’s business, charity functions etc. Many of these new agents or those working for years as part timers have little actual experience. Most of these very friendly part timers do, one, two or three transactions a year. Can you imagine any field where hundreds of thousands of dollars are involved. Yet the central figure has little formal experience. Works part time but has a great personality and wins business because they’re someone’s friend? Would you have a friend do plastic surgery if they were new or did plastic surgery part time?
Case Example – Over-priced Home Paradise Valley
In the case of a real estate transaction. The seller asks this part time or newer agent, “what she/he thinks the home is worth?” The friendly agent miscalculating the numbers comes up with a high price based on inaccurate calculations of data or a price below market. And just as an FYI , I promise you, these agents will sound absolutely 100% authoritative & confident. This is regardless of how little they actually know. It happens all the time. I have heard agents at open houses speaking “as if ” they wrote the book of real estate. Not uttering a single fact accurately. Thus becoming a contributing factor for 2024 over-priced Homes in Paradise Valley
The “I Want a Bigger Boat Home Pricing”
Scenario #4. As I am writing this article, a call comes in from a seller’s agent that said, “her client did not want to “come down on price of a home (my client made an offer on), because he wants to net $100,000”. Uummm, interesting I think. Now mind you. The amount the seller wants has absolutely nothing to do with “relevant ‘sold’ home prices in Paradise Valley or the value of his home. The home has only been on the market a short time and the seller simply “wants to make $100,000” . WOW !! Really?The seller just arbitrarily picked a number he wanted to net, then instructed his agent to ask for it. Part of the 2024 Over-priced Homes in Paradise Valley story.
Paradise Valley Home – Over-priced Analogy
Imagine you were interested in buying a 2022 BMW 7 series car. Conveniently, there were twenty five 2022 7 series BMW’s that had sold in Scottsdale in the last 6 months. Selling for between $55,000 and $65,000. So you call a seller with a 2022 7 series for sale in similar condition and mileage of those sold. The seller says, ” he wants $82,500″ and you exclaim,“Wow that is substantially higher than the others that have sold”. He responds with, “well that’s what I want to make”. Or he says, “he wants to pay for a vacation so he needs to sell for his number”. We see this type of response from overpriced home sellers all the time. Are you going to be the one to pay the extra? Hopefully not especially since you are doing research. Being aware and educated is essential.
Behind the Scenes – Home Purchase Negotiations
This conversation with the seller’s agent above brings up the next topic, “Behind the scenes. Negotiating with the seller’s agent of over an priced homes. In the case above, the seller’s agent was a very nice agent and she actually inadvertently sent more ‘comps’ that supported my clients (buyers) offer and apologized. She was genuinely disappointed her seller was so unreasonable. The home she had listed had only been on the market 27 days. It is very typical for the “over -priced “ home sellers to be very stubborn and unrealistic in first thirty days. This changes dramatically as days on market turn into months on market. In 2024 Over-priced Homes in Paradise Valley Return.
The Real Estate Agent and Paradise Valley Pricing
In our business there are three types of agents representing over -priced homes. #1 Those that know the home is over-priced and kindly and professionally do their best. #2. Those that are blissfully unaware and lastly. #3. The cocky agent who is clueless but speaks with such confidence and arrogance that it’s hard to feel sorry – for him/her when they lose the home listing 6 months later because the home did not sell.
A Behind the scenes Real Estate Story.
Five months ago I had an experience with just such a cocky agent. My clients were going to make an offer on an overpriced home. I called the agent, essentially a preliminary call regarding submitting an offer. The agent was sort of cocky and rude. The agent insisted, “the offer needed to be close to asking price. That was five months ago. The other day I just showed that same home again to another client. The listing agent took me aside at the showing. He could not have been sweeter. He suddenly became the nicest man I ever met. Basically apologized and was begging me to bring an offer. Quite the change of tune. He realized the mistake and was now very nervous. Noting: His listing contract with the seller was about to expire. Meanwhile the sellers had spent five months on taxes, utilities, home maintenance etc.
The home could have sold months before. Now when the home does sell, it will sell for less and the sellers will lose all the money they spent maintaining the home. Most Home sellers do not know how their real estate agent is interacting with agents representing buyers. I can promise you; many Home Sellers would be shocked to see how their agent represents their home and their interest.
Months 1 – 4. On Market Over-priced in Paradise Valley
Over priced seller maintains a cocky attitude based on his own beliefs and a bravado of his homes value or what he wants out it. This bravado is typically not based on any facts or data on the homes actual market value. Month 4 – The seller is still slightly confident and cocky but wants to meet with his agent more often to ‘discuss pricing and the need to ramp up more marketing’. At this time, the seller will tell his agent, “she /he needs to do more marketing”. The smart agent will kindly explain, “all the marketing in the world will not sell a home that is over-priced. Unless of course, they find the one wealthy buyer who just fell off the turnip truck.
Month 6. On Market Over-priced
The seller is getting frustrated and starts to blame the agent for not bringing an offer. At this time, he may interview more agents. The newly interviewed agents will promise the world and there is a mutual kumbaya, that the first agent didn’t do his/her job. However, just for good measure, the seller and new agent agree to reduce the price a little. Hugs and kisses all around. First 30 days with new agent are all rosy with updates, an open house or two, another “broker tour” then showings slow down again and no offers.
Month 12. On Market
The third agent is interviewed and hired. At this point the sellers’ bravado is all gone. The seller is humbled, listens carefully, laments all the time his home has been on the market and of course all the expense. The third agent, if experienced, has seen this, time and time again and knows the seller is ready to soak up actual facts, so the agent brings actual home prices sales data. This time the seller eagerly listens to every word and may even suggest going lower than the comparable sales. At this point, the seller is a mere shadow of his former confident self. The seller is essentially emotionally exhausted and upset about all the lost money paid out for bills etc. Unfortunately he was part of why, In 2024 Over-priced Homes in Paradise Valley Return.
Month 12 and three days. On Market and Priced to Sell
The home is finally priced at “market value” and receives an offer within 30-60 days and sells !! The third agent almost doing no work but being at the right place at the right time, is an absolute hero!!!
When to Make an Offer on a Home you Feel is Over Priced.
I come across this question all the time. Most people approach the offer in a manner that jeopardizes their chances of getting the home. The best time to make an offer on any home is when you are ready. Set an amount you feel the home is worth to you. Do not go over that amount. Key Point. The biggest mistake I see home buyers do is WAIT for the price reduction. Guess what? There are often times, five other buyers “being clever waiting for the same price reduction”. So what happens? There is a bidding war for the home. So the Best time to offer is actually before the price reduction. Make an offer when the seller is likely considering one. What should you do if a home you felt was over-priced sells? Please call me anytime to discuss this in detail.
“ To home buyers , TIME is the strongest, most effective negotiation tool for the eventual purchase of an overpriced home”.
Example of a Sale of an Over Priced Home
Now as promised, here is an example of a Paradise Valley home that just took this journey.
Pricing history Example, In this instance the first agent and subsequent agents were able to get the seller to make small concessions at a time.
First agent/ HOME NEW LISTING 2018
01/08/2022 First List price $2,150,000
02/11/2022 New list price $2,099,000
02-26-2022 New list price $2,050,000
Second agent
07-15-2022 New list price for the home $1,975,000
03-20-2023 New price $1,895,000
5-09-23 New price $1,795,000
Third agent
05-31-2023 New list price $1,750,000
7-10-2023 OFFER made within 45 days of final price drop
9-15-2023 HOME CLOSES SALE
HOME SELLS on 9-15-2023 for $1.6 Million. Exactly in line with comparable sales. 21 Months after first going on market. The additional time on market cost the sellers almost $105,000.00 for a vacant home. Not one additional penny was earned.
Final Tips for a Paradise Valley Home Buyer
If you’re a home buyer. I will share three home buying tips #1. Patience is key., the best home is yet to come. #2. Work with a great, honest, not pushy agent that is a FULL time Realtor. A Realtor that will take their time to show you homes and educate you on the market and home prices. Not a soccer mom/dad with a license or a friend who does it part time. #3. The over-priced home will collect days on market and will be purchased for less than you would have paid. Home list prices in Paradise Valley-Scottsdale are set by home sellers but “home sale prices” are determined by educated well informed buyers and their excellent Realtors.
Final Tips for a Paradise Valley Home Seller
If you are a seller. There are two essential tips #1. Work with a hard working, honest, not pushy agent that is a, FULL time agent. #2 Make sure the agent is talented with presentation and marketing. The value of the home can be greatly increased before it goes on market. (Ask me how). I specialize in Paradise Valley, Arcadia and Scottsdale luxury homes sales and purchases. Please call me anytime with more questions on; How to achieve a top dollar sale Or find and buy the very best home at the best price.
FOR MORE ARTICLES FOR BUYERS AND SELLERS PLEASE VIEW OUR SISTER SITE
Arcadiahomes-forsale.com
Michael Chaisson, Realtor
480-450-4632
Launch Realty
Premier Client Services
Ranked Top 1% Nationally
Circle of 26 Excellence Award Recipient
The Home shown was below was listed in Paradise Valley for 643 Days before the listing was canceled. 