The 2-liter tale and how it can help sell your home!

Wow, what a week it has been...buyers making offers, sellers not accepting. I think many sellers have not accepted the reality of their situation. According to Zillow.com, 51% of all US homeowners believe their homes have lost value. That leaves 49% who think their homes are as valuable or have increased in value in the last year! Huh? EVERYONE has seen the value of their home go down.

I heard this example while I was getting my GRI designation, which is Graduate, Realtor Institute. It goes to the core of how we, humans, evaluate value and make decisions based on PERCEIVED value:

Every week you go shopping, you pass those 2 liters of Coke, Pepsi, Dr. Pepper, etc. Invariably, they are $.99. It's a given, like the tides and taxes. You shrug, feel you are paying what is reasonable (based on recent purchases), grab a couple 2 liters of your favorite brand, and move on.

Then one week, the indescribable happens - the price on the same 2 liter goes up 10% and is now $1.09!

What gives? Given the increased cost, you decide to hold off on buying a 2 liter...the family can drink water for a week.

The next week, that same 2 liter is still $1.09 BUT a competitors 2 liter is back down to $.99. Time to switch brands - you grab just 1 2-liter in case you don't like it as much!

The next week, your brand of soda is back down to $.99 PLUS a 10% discount, making it $.89 total. Sensing that you just discovered the best bargain of the year, you throw 10 into your cart and make a beeline for the checkout counter.

Here are the lessons:

1) Value is perceived and humans establish a baseline for such value based on repetition. In real estate, they're called "comparable sales".

2) If the price is above our perceived value, we will change our spending habits AND/OR buy the lower-priced competition, even though we may not like it as much.

3) If the price is below our perceived value, we will make quicker decisions, perhaps spend MORE than we normally would, and alter our spending habits to secure the "deal".

Sellers, you will not get the upperhand in this market. Ask yourself - can I support this price based on comps? When was the last time you checked the comps? If you have been on the market for 90 days and your comps when you listed were older than 90 days, guess what? You are using comps which are 6+ MONTHS OLD and no longer viable.

Do yourself a favor and listen to your realtor. There is a reason why your first bonified offer (not a readily apparent lowball offer) is normally your best offer.