MONEY COMMENT
Setting An Asking Price For Your House

By Jane Mack (TMFJane)
July 25, 2003

A couple of weeks ago some neighbours put their house on the market for what appeared to be a rather cheap price. Much as I desperately wanted to have a nose around it, I didn't have the guts to fake enough of an interest to ring up the estate agent to arrange an appointment to view.

However, I was told by other neighbours who were keen enough to have a look, that, while it was a fantastic house at a ridiculously cheap price, it needed 'shed-loads' of work doing to it.

It sold within a week of going on the market so someone clearly though it was worth buying.

This contrasts sharply with some other neighbours who, mindful of last year's housing boom, put their own house on the market five months ago for what I thought was a rather optimistic sum of money. They needed to sell quickly so, at the time, I wondered out loud (to one of the owners) that they might be pushing their luck a bit with the asking price. But, understandably, they wanted to see how much they could get – after all, this time last year, house prices were escalating so fast that people were prepared to pay practically anything to get what they wanted.

Six weeks ago my 'optimistic' neighbours reduced their asking price by a few percentage points because they realised they had marketed their home at too high a price. And they're also counting the cost of the sizeable mortgage payments they have had to make during the five months of marketing the property. Suffice to say, two days ago, they were finally forced to accept an offer for considerably less than they had hoped for but which is much more than I think the house is worth.

It just goes to show that, if a property is put on the market at the right price, then it will sell very quickly. If it's overpriced, it will take time and money. And it also goes to show that, in spite of all the conflicting reports about house prices going up, down or staying the same, it's about time we started accepting that the housing market has changed in the last year. Just how much it's changed, we are only now beginning to discover.

If you are currently evaluating whether now is the right time to buy or move, I don't envy you. I'm in the mood for 'sitting it out' at the moment but I have no problems if you're up for buying or moving and then 'sitting it out'.

Personally, I don't think there is going to be any sort of housing crash but, as someone who remembers the days of negative equity, it would make sense to be prepared. I hope that whoever has bought the 'cheap' house over the road hasn't overstretched themselves considering the amount of work it apparently requires. And I hope whoever has bought the 'overpriced' house will eventually recoup what they bought it for. For the moment, I'm staying put.

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