Psychology Of Home Sellers

[Executive Sadman]

Time and time again, i see new properties added, similar or exactly the same as existing ones, but 25-35% more expensive. Inevitably, over the course of a few months the price drops several times until theyre the same price as the ones that actually sell.

Why not just list it at a lower price to begin with?

Why when there are houses not selling at the lower price would exact copies sell at 25%+ more?

[cakehead]

Because lower offers have become the norm. Price and value bear little relationship to each other. Some asking prices are cheap but it takes nerve to go in high. My experience of low bids being accepted is you get a crap house.

[The Masked Tulip]

Denial and Control are incredibly powerful human emotions.

What can these people do - control the price they house sells for? Be in denial about the price it will sell for, about the current market.

[Number79]

To be fair I would guess that the vast majority have not been hawkishly watching RM like hpc'ers and have no real idea about houseprices. This may sound daft because to be selling you would also be looking for somewhere to buy? It seems that many are putting their houses up for sale and trying to sell first before even looking.

They get a valuation from the EA and work with that. Some then learn and others don't.

[winkie]

When people are looking to buy they can now check the price of the road, in many roads the shell of the houses are similar, that is what counts, not the fancy black kitchen worktops. loo and diy shop chipwood units. When someone accepts a low offer to sell it lowers the prices for that road...this is what will in the end pull prices down, people love a bargain so why pay over the odds, when you jolly well know someone has got a house recently where you want it for less.

[cakehead]

You have to be highly motivated to sell a house for less than you gave. Currently there's no engine for mass sales, individual finances go belly up, keys are handed back and the house goes back on the market with an EA. That's a long way from a national fire sale. HPCers may have to wait a few years to see that happen, if it ever does.

If low offers are being accepted it's on the quiet and will only register in stats later.

[ccc]

I know someone who is generally a pretty sharp cookie. However they are now trying to sell their house. Already living in another one. No idea of the finances but must be a little worrying for them anyway.

Trying to sell for ages. Almost no interest at all. Agent told them a few weeks back that they should try dropping the price and see what happens. The response ? Don't think there is any point in dropping the price when there is absolutely no interest at present. What would be the point...

I didn't point out the obvious. I mean, is it not clear that dropping the price may generate interest ?! Does someone really have to point this out to an otherwise smart person...

I do think most deep down realise this. They are just in denial and in hope that it will all blow over and they will get their 2007 price like eveyone used to tell them. Slowly reality is getting through - I think. The denial is certainly not as vehement as it was a year ago. Fear is bubbling through.

[Number79]

I know someone who has had their house for sale for about 6 months.

He wants to move up and has realised that as prices have fallen that the gap between his house and the next one up has narrowed.

Inspite of understanding that logic based on falling prices he has had no interest in his. I pointed out that it must be overpriced. He refused to accept that and is of the opinion that his house is fairly priced. I pointed out that if buyers agreed then the place would have sold or at the very least had some interest.

He can not accept that if it has had no interest then it must be over priced and drop his asking price even though he says exactly that about houses that he has been viewing.

Like everyone else he wants top dollar for his house and expects a huge discount on the one he is will be buying. I do not see that working out for him.

[Redcellar]

Time and time again, i see new properties added, similar or exactly the same as existing ones, but 25-35% more expensive. Inevitably, over the course of a few months the price drops several times until theyre the same price as the ones that actually sell.

Why not just list it at a lower price to begin with?

Why when there are houses not selling at the lower price would exact copies sell at 25%+ more?

Re the description: are homebuyers just dumb, blind or easily lead.

Yes they probably are (all three).

Buying a house seems to be an incredibly emotionally lead thing even though it is the biggest commitment of our lives. The same can be said of a marriage, that ends in divorce. Probably all three are the average for human nature.

[Lagarde's Drift]

What's weird is on immediate comparison it would seem that the stock market is the exact opposite, particularly with more volatile stocks. For example, on a bit of an upswing and everyone is buying maniacally. If the price drops then everyone is running around like headless loons selling. Nuts.

Thinking about it though, I think the housing market is the same human psychology as any other market. It just takes a whole lot longer to work out. The reluctance to realise a loss, leading to an eventual larger loss is a powerful and common emotion. In the stock market this may last 5 minutes, in the house market... well, 5 years?

[cakehead]

Trying to sell for ages. Almost no interest at all. Agent told them a few weeks back that they should try dropping the price and see what happens. The response ? Don't think there is any point in dropping the price when there is absolutely no interest at present. What would be the point...

I can see his point. Unless you're desperate to sell how do you decide how low to go? I think the idea that it's a buyer's market is an illusion, that would require diverse properties all at similarly 'low' prices, choice in other words. What you have now are individual properties sold as duress sales that aren't a barometer of the wider market. It's a good market to be in with ready cash to buy for letting but not a good one to find your dream home, just like the early 90s in fact. Anyway, you'd have to be crazy or bankrupt not to let it at current rental values and rent another for your own use.

[Reck B]

I can see his point. Unless you're desperate to sell how do you decide how low to go? I think the idea that it's a buyer's market is an illusion, that would require diverse properties all at similarly 'low' prices, choice in other words. What you have now are individual properties sold as duress sales that aren't a barometer of the wider market. It's a good market to be in with ready cash to buy for letting but not a good one to find your dream home, just like the early 90s in fact. Anyway, you'd have to be crazy or bankrupt not to let it at current rental values and rent another for your own use.

Buy to let, rent rent rent.

****** off.

[Lagarde's Drift]

Anyway, you'd have to be crazy or bankrupt not to let it at current rental values and rent another for your own use.

You're gonna have to do better than that, troll.

[cakehead]

Buy to let, rent rent rent.

****** off.

Don't see your point. I'm about to rent with a view buying in a couple of years. That doesn't change the fact that not enough people have to sell currently to shape the market. Most house sales are from people who fancy a move, not FTBs. In other circumstances they'd trade up, down and sideways but until something drastic happens they'll sit on their hands. If I want to buy now and in all likelihood next year or the year after, I'd put money on the fact there won't be bargains of the kind people on this thread are anticipating, which is blanket 30%+ drops.

High rental values are an additional factor in maintaining the status quo. Why do people cry foul whenever they hear something they don't like? You don't have to be a VI to point out the bleeding obvious.

[Unsafe As Houses]

Time and time again, i see new properties added, similar or exactly the same as existing ones, but 25-35% more expensive. Inevitably, over the course of a few months the price drops several times until theyre the same price as the ones that actually sell.

Why not just list it at a lower price to begin with?

Why when there are houses not selling at the lower price would exact copies sell at 25%+ more?

It'll be at least partly down to the 'my house is different effect' - people thinking their house is worth more because they like their house more than their nearby neighbours' houses for sale, and so they price accordingly. Once it is clear that their house is attracting limited interest, they (slowly) lower the price, or lower the price when they see other nearby sellers lowering theirs.

Edited November 18, 2010 by Unsafe As Houses

[ccc]

I can see his point. Unless you're desperate to sell how do you decide how low to go? I think the idea that it's a buyer's market is an illusion, that would require diverse properties all at similarly 'low' prices, choice in other words. What you have now are individual properties sold as duress sales that aren't a barometer of the wider market. It's a good market to be in with ready cash to buy for letting but not a good one to find your dream home, just like the early 90s in fact. Anyway, you'd have to be crazy or bankrupt not to let it at current rental values and rent another for your own use.

They are desperate to sell. Well clearly not quite desperate enough - but can't be far away. I imagine it is giving them SERIOUS stress. That is not good for you.

The point is lowering the price may increase interest. That is a simple fact. However people seem unwillingly to acknowledge this. I suppose because when they finally do they will have to admit they are not getting the money for their house that they want.

It is probably simple denial.

Nobody wants my house at £500k so nobody wants my house full stop.

If you think about this, it is such ******ed up thinking. When you stand back and really think about it. I don't think most of them deep down actually believe it.

[Si1]

It'll be at least partly down to the 'my house is different effect' - people thinking their house is worth more because they like their house more than their nearby neighbours' houses for sale, and so they price accordingly. Once it is clear that their house is attracting limited interest, they (slowly) lower the price, or lower the price when they see other nearby sellers lowering theirs.

really good point - my combined ma and bro' view on bro's house is - areas is immune to price falls as it's so nice, and he spent 30k on the house so it's nicer than the rest

[eric pebble]

I know someone who is generally a pretty sharp cookie. However they are now trying to sell their house. Already living in another one. No idea of the finances but must be a little worrying for them anyway.

Trying to sell for ages. Almost no interest at all. Agent told them a few weeks back that they should try dropping the price and see what happens. The response ? Don't think there is any point in dropping the price when there is absolutely no interest at present. What would be the point...

I didn't point out the obvious. I mean, is it not clear that dropping the price may generate interest ?! Does someone really have to point this out to an otherwise smart person...

I do think most deep down realise this. They are just in denial and in hope that it will all blow over and they will get their 2007 price like eveyone used to tell them. Slowly reality is getting through - I think. The denial is certainly not as vehement as it was a year ago. Fear is bubbling through.

Excellent analysis........

[Kyoto]

They are desperate to sell. Well clearly not quite desperate enough - but can't be far away. I imagine it is giving them SERIOUS stress. That is not good for you.

The point is lowering the price may increase interest. That is a simple fact. However people seem unwillingly to acknowledge this. I suppose because when they finally do they will have to admit they are not getting the money for their house that they want.

It is probably simple denial.

Nobody wants my house at £500k so nobody wants my house full stop.

If you think about this, it is such ******ed up thinking. When you stand back and really think about it. I don't think most of them deep down actually believe it.

I'm not sure it's so cut and dry. If a person likes your house at £475k, they're going to like it at £500k. Conversely, dropping your asking price by 5% still probably leaves you with the same pool of buyers. Stamp duty thresholds also serve to push the market into distinct segments.

Of course all things being equal a cheaper price will get it sold faster, but I would probably wait till negotiation stage rather than being too quick to chop off a few thousand off the asking price.

[Giordano Bruno]

I'm not sure it's so cut and dry. If a person likes your house at £475k, they're going to like it at £500k. Conversely, dropping your asking price by 5% still probably leaves you with the same pool of buyers. Stamp duty thresholds also serve to push the market into distinct segments.

Of course all things being equal a cheaper price will get it sold faster, but I would probably wait till negotiation stage rather than being too quick to chop off a few thousand off the asking price.

I disagree. I love my rented flat for lots of reasons but the best reason is that it's cheap. I can afford it easily. All the other reasons pale against that reason.

[cakehead]

I'm not sure it's so cut and dry. If a person likes your house at £475k, they're going to like it at £500k. Conversely, dropping your asking price by 5% still probably leaves you with the same pool of buyers. Stamp duty thresholds also serve to push the market into distinct segments.

Of course all things being equal a cheaper price will get it sold faster, but I would probably wait till negotiation stage rather than being too quick to chop off a few thousand off the asking price.

Precisely.

[mel in w9]

Well probably because ONLY dropping the price by 5% is not really reflective of what the market is doing. This isn't some temporary menial fall in the housing market, this is the beginning of the big collapse.

I predict in 12 months time housing will have fallen by about 40% all over the UK (and yes that even includes some nice parts of London). If I was an EA I would seriously be trying to hone up on another skill.

PS. I just changed my status from Neither to Bear. And away we go....

[cakehead]

I predict in 12 months time housing will have fallen by about 40% all over the UK (and yes that even includes some nice parts of London).

It really, really won't. If it makes -40% it will take years to come about. I keep asking the same question, what's the mechanism to precipitate a sudden drop? There isn't one I can see.

[Mrs Bear]

It'll be at least partly down to the 'my house is different effect' - people thinking their house is worth more because they like their house more than their nearby neighbours' houses for sale, and so they price accordingly. Once it is clear that their house is attracting limited interest, they (slowly) lower the price, or lower the price when they see other nearby sellers lowering theirs.

And it never seems to occur to people who've spent a bomb on e.g. a kitchen they think is so perfect, that however much it cost, it's almost certainly not what someone else would have chosen.

[19 year mortgage 8itch]

Anyway, you'd have to be crazy or bankrupt not to let it at current rental values and rent another for your own use.

Earlier in the year, sold a flat. Mortgage interest was below £200 p. m. Rental income over £500.

Not bankrupt, not crazy, not interested.

I want a family home to live in, how can I expect to do that if I go round behaving in precisely the way that stops me doing that?