Seller's Guilty of Overpricing? More likely to base asking price on their purchase price than current market value.
Probably the most difficult thing I have to do in my business is to tell a homeowner that their property isn't worth what they think it is, and in today's market, I'm having to do that a lot. Most sellers either have not paid close enough attention to the market the past few years or they're in denial and don't want to believe they're included with what's going on in the current real estate market. I often hear; "yeah, I've heard the market's down, but my home has..."
Proof that this is a common phenomenon can be found in a recent Zillow Report that seller's nationally who purchased their home after 2007 have priced their homes 14.1% over market value, those who purchased prior to 2002 priced theirs 11.6% over market value and those who purchased between 2002 and 2006 priced theirs 9.3% over market value.
"Post-bubble buyers seem to believe they escaped the worst of the housing recession, as evidenced by how they price their homes today," said Zillow Chief Economist Dr. Stan Humphries. "But 2006 was just the beginning of the housing recession, and it is continuing in earnest to this day. That means that even people who bought after the bubble burst need to break out the pencil and paper and do serious research into what has happened in their market since they first bought their home, whether it was four years ago or six months ago.
Locally, I've seen where sellers do much the same, which can be evidenced by statistics from the NorthStar MLS for the Hudson area (June 1, 2010 - May 31, 2011) that shows that sellers have had to reduce their asking price an average of 7.5% from original asking price to get in a range to receive an offer from a buyer and then negotiate an average of another 4.4% down from there to put a sale together.
Sellers would be best served to heed the advice of their Realtor and price their property "closer to the true market value" right from the start. By doing this, we're seeing that buyers are informed enough about the property values, that they'll know a good value when they see it and act on it.