Seller Capitulation-Too Little too Late?

Do home sellers that refuse to lower their price help help prop up home values or do they hurt the market ?  I have often thought about this and did a little research, one thing is clear; they hurt themselves.  I realize that not everyone is able to sell at lower prices for a variety of reasons but most apparent- they owe more on their mortgage than the house is worth.  Just a few years back in a rising market, a home got swept up in the frenzy and buyers paid more than they should have and sellers received more than the home was worth.  So in a good market  it didn’t matter as much.  Well has that changed….in a declining market the last thing a seller wants to do is react to what has already happened around them.  Playing catch up and chasing the market down is a nightmare, a game a seller will surely lose.  While seller A is holding out for his price, seller B has just signed papers at a price seller A “won’t give the house away at”,  a comment we hear that all the time, however, Seller B has just made seller A’s house worth less.  Buyers will now be using Seller B’s house as a comp.  Seller A is actually advertising for every other house on the market, his house makes the competition look better!  I believe in a declining market, hold out sellers do not prevent the market falling  to it’s natural level.  As soon as realistic sellers properly price their homes and sell them, high priced homes just stagnate and eventually sell for lower than the “I’m not giving it away price”.  Homes on the market for more than 120 days generally sell for 80-85% of their original list price.

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