A report just released by Zillow.com shows that current home sellers who purchased their homes “after the bubble” (2007 or after) are overpricing their homes by more than sellers that bought during the bubble (2002-2006) or before the bubble (pre-2002). According to the report, current sellers that bought post-bubble are overpricing their homes by an average of 14.1 percent, compared with sellers that bought during the bubble that are overpricing their homes by an average of 9.3 percent and the sellers that purchased pre-bubble are overpricing by 11.6 percent. Hmm, notice a theme? On average, ALL sellers are overpricing their homes in the current market.
“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.
“Overpricing homes causes them to stagnate on the market and keeps inventory from decreasing – not a desirable outcome for either the sellers or the market as a whole.”
What a seller paid for a house is irrelevant..
Zillow conducted a survey of homeowners who plan to sell their homes in the next four years. Those who bought their homes post-bubble were the most likely to base their asking price on the original price of their homes, with 17 percent saying that would be the primary thing that would influence their decision. This is the part I just don’t understand about sellers, as you would think by now they would get the fact that what you paid doesn’t matter to someone that is going to buy your home. What a buyer is going to care about is what your home is currently worth on the market and how it stands up to the competition. Oh yeah, speaking from experience, buyers do want to base the price they pay for your home on your cost but only when you bought it below market and the current value will yield you a nice profit. So, in other words, unless it is in the buyers best interest, they don’t care how much a seller paid.
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