Is there a price for overpricing?
November 13th, 2009 | 
Author: Sellers have been hearing for years that there’s a danger to overpricing. Namely that after a few price reductions and a long time on the market that the eventual sale price will be lower than if the property was priced right from the start. New tools allow us to examine the list price vs. sale price ratio for properties that have had no price changes against properties that have had one or more price changes. Follow along as we look at Uptown and the entire City of Chicago.
Posted in Advice, Chicago, Real Estate, Sellers, Video | 
Tags: Advice, Chicago, Real Estate, Sellers, Video
I love data like this. One question: how can we tell that the overpriced homes weren’t reduced to a price still 10% above what the market demanded and the final sale price was what it should have been listed at originally?
Great post!
Adam, I am honored that you are still reading. Sometimes I am blown away when I hear kind words from out of the blue. Thank you!
In the example video, and in the tool I used for the demonstration, we’re relying on the fact that one example (or a few) does not make a trend. One property can demonstrate a fact. And a few properties can certainly show a change.
But in our example above, the City of Chicago had 23,182 properties that closed in the last 12 months (October, 2008 through October, 2009.) And Uptown had 606. This is enough data to demonstrate the trend rather than a unique situation like you’ve described. Certainly SOME properties may have sold for a price that could conceivably have been close to the same as the properties that did not have price changes. But with this much data, it’s not possible for that to occur for all the properties in the sample.
If you can think of any other brain teasers that I can answer by playing with my new Agent Metrics and my screen capture Camtasia software, let me know. I’m tired of appearing before the camera in my full geeky glory.