On the TV Show The Price Is Right contestants nervously laugh as they try to name the real price of a product. Many home owners right now may feel the same sense of uncertainty as game show contestants. Theyre left with sweat on their brow wondering how they got drafted into a round of Bob Barkers The Price Is Right and what they can do to win the housing game. Understand the market conditions In a slowing housing market referred to as a buyers market, the buyer control the price, not the seller. The homeowner is only going to get whatever price a buyer is willing to pay for their property. Plus, the home seller will likely encounter a number of contingencies the buyer adds to an offer that may also be well below the listed price. A rule of thumb for sellers pricing reality is that it take about 6 months for them to reset their expectations. In the meantime, a lot of properties are listed at prices established as if the market was still experiences double digit gains. The reality is that prices have moderated (and in some cases are experiences a slight adjustment down) and the time it takes to sell a property as increased. Looking back is pass Many sellers still reflect on the past and are anxious to get a better price than their neighbor did four months ago. Its difficult for these sellers to internalize that their home has not appreciated at the same rate as in the past. In some cases, the home may even get less than a home sold during the rush. Weve seen many homes in hotter markets go for thousands over the list price because anxious buyers feared getting locked out of the market. During these conditions the price became secondary to winning. The home sale cycle is longer now The same home that sold four months ago above the list price sold in on average in 12 days. Homes are now taking anywhere from 30, 45, 90+ days to sell. Thats a hard pill to swallow for many sellers looking to make a quick exit. The price reduction impact on sellers Home price reductions are doubling each month. Numerous properties are being listed above the acceptable price range in this market place at the insistence of sellers. For example, a homeowner recently demanded that the Realtor list their property at a price that was 10% above the most recent sale in their neighborhood. Within 30 days the agent suggested a 5% reduction. Sixty days later the property is still on the market, overpriced and stale. Like day old bread it sits there waiting for someone to grab it while fresher and lower priced deals look more attractive to home buyers. Seller: Are you motivated? Many sellers do not have a set time frame for selling their home. In terms of pricing, this means their motivation is low. If this is the case, the home should be listed at a price attractive to a lot of buyers. The seller can then count on selling their house within the average days on market for their price range and neighborhood. Your Realtor can provide you this type of information. On the other hand, a seller thats about to close escrow on a new home is highly motivated. They have a much more urgent need to sell their home. If this is the case, the seller needs to list the home so its attractive to an even wider audience than if they werent as motivated. That means pricing on the low side of the range indicated for the home. Offering incentives to potential buyers and their Realtors on top of an attractive price is a terrific motivator as well. Another strategy that works is to list the home just below market. No matter what you do make sure the listing Realtor implements an aggressive marketing plan to get the word out to potential buyers and Realtors. Get past puppy love by making your home more attractive This one is the real gotcha for sellers. Naturally, if a seller has lived in a home a long time it reflects their personality and preferences. Perhaps, the shocking pink play room, or the mirrored ceiling are items they adore and think would add a premium to the home. The reality is theyre often a detriment. Check with your Realtor for the impact these items will make. Better yet, hire a staging company to give neutral feedback it will pay off in multiples. Curb appeal and more Weve all seen those home and garden shows that dissect a homes curb appeal or move-in condition. What theyre talking about is really important in todays market. Take an honest look at your property. Has it been updated? Are all the handles still on your cabinets? Are the toilets cleaned regularly? (Eliminating the ick factor is a biggie.) Should the psychedelic wallpaper be removed? Can any improvement be made to the exterior of the home to improve curb appeal? Many homes that sold in the recent past at a premium generally sold as is. There are too many properties on the market today to expect that buyers will be willing to replace cracked light switches, steam off wallpaper, or repair broken door knobs. Instead of going through the trouble and upkeep theyll simply pass on the home and find a pristine one at the same or better price. Its best to replace and repair those items before even listing the property. Contingencies Theyre back. This is a negotiating point that for a while went the way of the dinosaur. Now theyre tossing their thunderous weight around. The most common contingency added onto the sale of the home is upon sale and closing of the buyers home. Another common contingency is to make an offer dependent upon loan approval. While financing should have been resolved before even making an offer, many buyers today dont take care of these prerequisites before looking for a home. Balancing factors When determining price its a matter of balancing emotions, market factors and needs precious to both sellers and buyers. Sellers that understand these various factors and rely on research their Realtor supplies will have a distinct selling advantage. While other homes may be languishing, if youve done your homework there should be no problem selling the home. Still not sure what to do? Talk to a quality real estate professional. Theyre trained and knowledgeable about current market conditions. They have access to data that sellers just wont be able to get. This can make all the difference on the sale of any home. |
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