The RealEstateJournal.com has a good article on things to consider in selling your home in today's market. With housing demand the same or less than last year and inventories through the roof, you need to differentiate your house from the pack so it is at least shown. Without showings, it is very difficult to get a house under contract.
Tip numbers 4 and 7 are key, in my opinion.
4. Count your costs. Don't turn down your first offer. In a declining market the first offer may be the best. Also, when you factor in mortgage and tax payments, the longer your house takes to sell, the more money you stand to lose. "I was talking to an agent whose client turned down an offer when her house first came on the market," Ms. MacBeth says. "That amount is what the homeowner has lowered her price to now, two months later, and the house isn't selling."
In other words, the listing's price is now "chasing the market." In this case, it is fair to assume that the offer received was close to market value for the home. Now, priced at the original "market value" chances are very good that the house will sell for less than the original "market value" This is called chasing the market. If the home had been priced at or a shade above market value, this house would have been sold a lot sooner.
7. Take the money and run. If local sales are sliding, you might want to get out while you can, Mr. Rocker says. "People don't know when it's time to take a loss and move on," he says. "They will keep their prices up for two years, and at the end of the day, lose 35%." If a cooling market translates into a smaller gain than you expected upon the sale of your home, consider relocating to an area with cheaper housing prices to make your money go further. "In California, people are driving an hour, two hours, to work so they can have more house for their dollar," Ms. MacBeth says.
Many folks will stick hard to their price, because they do not want to appear to have been taken. If, in the end, to sell the home, sellers accept a much lower price, not only have they lost money on the transaction, but have also incurred two other costs rarely spoken of; holding costs and opportunity costs.
Holding Cost – the monthly amount it costs a home owner to hold onto a piece of property. This would include principal, interest, taxes, insurance, utilities, maintenance, association dues, etc. If a home costs $2,000 to hold onto per month, than 6 months on the market cost the seller $12,000 to get their price.
Opportunity Cost – the projected cost of the money tied up in your home. If you could sell that home in 3 months, you have an extra $6,000 in your pocket. You would have also beat out Bernanke and his rate raising spree, which, I do not need to remind you, will cause mortgage interest rates to go higher.
The Example – A house is on the market for $225,000 that sells for $200,000, nine months later. The sellers also need to buy a home after completing this sale.
Holding costs per month: $1,000 in principal, interest, taxes and insurance (6% rate); $150 in gas and electric; $25 in association dues; $150 for maintenance…a total of $1,325 a month or $11,925 for nine months. Their sales price would have to be at least $213,075 to break even on just their holding costs.
Opportunity costs, while a bit intangible, can be quantified by way of the replacement home. To purchase a home, they will need to take out a mortgage. Say they purchase a home for $250,000. While they got a great deal because the sellers needed to get out quickly, and hence, dropped their price, their mortgage interest rate jumped from 6.0% to 7.0% because they waited so long. With a $200,000 mortgage at 7%, their monthly principal, interest, taxes and insurance payment comes out to nearly $1,300 a month. If they lived in this home for just 5 years, that's an additional $18,000 they will pay as a result of being stuck on their price.
All told, in this example, the seller's cost themselves nearly $30,000 for not pricing their home correctly, or for not wanting to appear as if they "lost" money on the sale of their home. As you can see, being hung up on a price in this current market can cost you more down the line.