Many home sellers are suffering the consequences of the Down Market Curse. This malady is costing individual homeowners thousands of dollars. Guesstimates place the total impact of the down market curse upwards of $100 million nationally since the beginning of the year.

There is no telling how much the curse has cost since the correction began – $500 Million? a $billion? Who knows? One thing is for certain though, the down market curse continues to take its toll in spite of valiant efforts by experienced Realtors and lenders to keep their clients from succumbing to the curse.

The down market curse is often referred to as “chasing the market down.” Many, many home sellers hoping to maximize the net from a home sale continue to ignore the advice of their real estate agents and the reality of their local market – resulting in more victims of the down market curse.

We continue to talk ourselves blue in the face with some clients trying to prevent the curse from claiming them – but some people seem particularly resistant to accepting the reality of the current market. The common belief (hope) that many of these home sellers have is that somewhere out there is "the person" who is willing to pay the homeowner their asking price regardless of the all the evidence that the home is over priced.

These sellers seem to think spending more time, money and effort on marketing will result in selling ice cubes to Eskimos. It’s interesting to note that these same sellers do not want to pay the asking price for the home they are moving up to.

Here are a couple of down market curse examples – names and figures change to protect the afflicted – the percentages are correct as is the loss.

Young Dreamers – A young couple wanted to sell their home and move up to a bigger house in preparation of expanding their family. The market was a year into its correction and prices were still falling dramatically. Our suggested listing price was $40K lower than they were willing to go. We listed at their price and began a futile campaign from week two to get them to come down in price. Three months into the listing they agreed to drop the price – not to our suggested price, but to our original suggested price – meaning the house was still over priced for the local market which continued to settle. In the end, they took the house off the market only to relist it 6 months later. At this point they priced it to sell and it sold in a few weeks. Total loss that could have been in their pocket had they priced the home to sell when they first listed it – $120K.

Line in the Sand – This move up couple drew a line in the sand. The price on this $million home was set $50K above our suggested listing price. The home was absolutely gorgeous and had lots of appeal. We had an agreement that we would lower the price if we didn’t get any action in the first few weeks. (Sellers seem to agree to this, but fight tooth and nail when the time comes to face reality). The response from the Realtor community was very favorable on the house. Feedback on the price was it was “a little high.” Two offers came in and both were rejected – they were about 9% below the asking price. We encouraged the owners to counter in a manner that would lead to a sell, but a line in the sand was drawn – we won’t sell for less than $$$$. Time passed. Traffic lessened. No offers came in. The price inched down. The owners moved and now had two homes. Time passed with no activity. The owners decided to sell and lowered the price to rekindle interest. The home sold in two weeks. Total loss $110K – $70K below the line in the sand.

In our experience, the down market curse seems to afflict about 80% of home sellers. Fortunately the majority of sellers can face the reality of the market after a couple of weeks of the house being on the market. In the past year, we’ve had three sellers that just could not get it in time to save themselves tens of thousands of dollars.

I asked the young dreamers what we could have done to convince them – their answer – nothing. They were prisoners of the belief that somewhere there was that one person who would buy their home for what they thought it was worth. My teammate reports that the line in the sand couple are kind of kicking themselves in the head for not seriously considering those first two offers.

It’s interesting to note, that not too long ago, there was a common belief that Realtors wanted to jack up the price so they could make more commission. Then the market turned and now we hear – Realtors want to price homes low so they don’t have to work and can get an easy commission.

I know a lot of Realtors. Almost to a person, what they want is to get the client’s home sold for top dollar according to what the market will bear so their clients can get on with their lives. The East Bay housing market is still settling. If your home isn’t selling, the issues is probably price not advertising.

If there was a flurry of activity and traffic in the first few weeks and that has dropped to almost nothing – it’s the price – the market is rejecting the price point. And most likely, no amount of marketing is going to locate that one person who might want to buy an over priced home. That buyer has a lot to choose from these days.

• Finding the Pricing Sweet Spot