christopher_robin wrote:To make any sense of that ratio, I would want to screen out all the FSBO listings. Those people have a seriously distorted sense of what the market will bear. Then they cry about the house sitting on the market for months on end.
I heard an interesting bit on this on All Things Considered last week. A professor of behavioral finance (?!) at Santa Clara university said that, in a normal market, homeowners typically ask for about 12% more than they think they can reasonably expect for their house. But in a down market, when homeowners worry they might take a loss on the selling price, they'll ask for about 33% more than they can reasonably expect.
He calls the psychological tendency behind such pricing "aversion to sure loss." Sellers would rather gamble by setting a much higher asking price, hoping they'll eventually find a magic buyer who'll pay their price, even if it means waiting longer. But they usually end up dropping their prices in the long run, to better match the market.