Finally.
That is the feeling I am getting from real estate agents across the country as sellers are finally recognizing that price is what is selling homes in todays market. Having a house in great condition helps, and no one ever bitched about being shown a home with granite countertops or hardwood floors, but price is what is selling homes in 2009.
With tight lending standards and appraisers that are gun shy, the odds of getting a home that is not priced to the bone financed is harder than ever. Add to that buyers that are looking at foreclosures a dime a dozen and fearful of overpaying makes home pricing the key criteria is fairly obvious.
As a famous detective said, it is “Elementary, my dear Watson.”
Price your home right and it will sell. Overprice it and it will languish.
Real estate agents, who have been pleading for months with stubborn sellers to lower their prices, say the tide has finally turned and sellers are capitulating. Price reductions totaling $25,000 or more are becoming commonplace, and homes that have been relisted after several months off the market are being offered for significantly less.
“We’re essentially at fair market value,” said Jack Ablin, chief investment officer of Harris Private Bank. While he said he believes the worst is behind the market, he added: “Given the credit conditions and the environment, it wouldn’t be a surprise to me if we shot [below fair market value].” via chicagotribune.com.
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Pricing correctly from the start is key. At a time when people will drive right by a gas station to save 2 or 3 cents,a home that is 8 or 10% overpriced will not be taken seriously.
One solution is to have sellers agree to a price reduction policy along with the listing agreement. For example, the price will be reduced by 2% every 30 days until there is signed contract. Or, the price will be reduced by $2,500 after every 10th showing without a signed contract. By stipulating this up front, there is no misunderstanding as to when prices are to be reduced. If a seller is serious about selling they will agree that this makes sense for both parties.
Sometimes I think it's us, the Realtors, who need to "understand what it takes to sell a home in 2009"!
Pricing is everything in this market. But how often will we Realtors walk away from a listing because the seller is unwilling to price it appropriately. I've lost listings to other agents because I wanted to price it where I knew it would sell and my competitor priced it to get the listing. No regrets though. Especially when I see the home is still on the market after several months and the price has been reduced repeatedly until it's priced lower than I originally suggested.
Great point Karen. The real estate agents that take any listing hoping then to bring the price down have always been a problem.
Price has always been the key and it simply has just been magnified here in the last 1.5 years.
Location as the old adage says trumps everything, but price is a 100% lock at #2 on the list. The best thing a listing agent can do right now is to take their sellers around to at least 8 similar properties to the one they are listing and analyze:
1) the active for sale price
2) a few pendings
3) 1-2 that are closing.
Then make sure you know the story of why the property sold at that price. If you don't know this then you could be off 2-3 % on your price as well. With some of the sales we are seeing here in the Santa Barbara CA area, if you don't know the story behind the sale price, then your assessment of the market could be off 5% or more.
Sellers in Miami are finally realizing that they have to lower the prices to sell their units. I regularly get calls from sellers wondering why have no offers, when they have not lowered the price in months.
Price for the condition of the property is one of the most important laws of real estate. The days of inflating home prices are over. This is very elementary, and I'm glad sellers are finally taking notice.
Yep, so true. Overall, the outlook for commercial real estate in 2009 is neutral to slightly negative. Private real estate returns are expected to remain relatively cold…..
Price is certainly the driving factor, there's just too many great homes on the market that are short sales or foreclosures. It's hard to "give up" that paper wealth but motivated sellers need to just accept that it's truly gone for at least a few years and that selling their home is contingent on competing with the market.
Pricing is key in any market. In todays market, pricing is key because of the abundance of properties we have available. It's a buyers market and investors need to take advantage of short sale/ foreclosures and bank owned properties.
I think now sellers are finally coming to grips with what it takes to sell property in today's real estate climate. The initial sticker shock of declining prices kept many in denial much longer than it should have. I kept hearing "but my house has upgrades", like that has a big influence in the greater sceme of things. Yes, somethings help but when homes across the street are selling short for peanuts it dramatically influences the surrounding selling properties; I think that is where sellers are right now. So give them some more time to acclimate to the new conditions. If you throw a fish into strange water it will have some shock.
I use to work with FSBOs until the Las Vegas market made it impossible to sell anything that wasn't bank owned. Either way, my sellers always wanted to try and list their homes $50k – $200k above market value thinking that they would find someone who would be in love with their property. 9 months later they would finally hire an agent to list their property at a much lower value than they could have gotten had they just listed with a reasonable price in the first place.
Many sellers are willing to take a loss on the sell of their home, if they feel they can make it up on the purchase of another home. And, in today's market they usually can.
I can't say that I think sellers have come to accept their place in this market yet. It is very difficult to walk away from a loss, especially when it is your home. Add to the problems that lenders are not willing to settle as of ten as they should and end up with costly foreclosure expenses after months of no payment rather than accepting a reasonable offer.
I wonder how much great marketing exposure helps in this down market. Does paying for 'featured listing' spots on real-estate sites pay dividends in this type of market?
We all are waiting for deals. We get a call and clients come to see the apartments and then don't know what happens the deal never happens or works out. This is what is going on everywhere all over the country. We thought that making our ads featured will help and paid more money for that. But no only pockets are getting empty nothing is coming in back. So We are realizing the price of selling a house. Now we know how much does is it really costs us. So spending the money on advertising and keeping the fingers crossed on deals. That is all we can do.
Regards,
Michael McLaughlin, Cary real estate
It seems to me that fair market value is mostly determined by how much buyers are willing to pay. It doesn't matter what sellers want, or what financial experts say.
For a while housing was a great market for home owners to make money and lately they've been going through some losses. So it make sense that they don't want to price their homes according to the maket. the last 4 months has been tough on both us and the clients. buyers are not willing to pay as much anymore and sellers are not used to that.
I just happened to read this blog while surfing on real estate stuff and I found it interesting that this trend is present everywhere, even here in the freakin' Middle East. The prices of property have dropped like 25% and some going close to 50% in Dubai. I for one regret getting this place a a year aago and now see that rental rates have dropped so badly. Thankfully, I stumbled upon some brokers (Roots Land Real Estate) that were nice enough to help me cancel my current lease and find me a better deal. Fingers crossed, I hope to move soon. Let's all hang in there.
As an agent in Northern Minnesota I have seen thing pick up dramatically in the last 2 -3 weeks. I hope this is a sign for us up here anyways and maybe be a slow trickle effect. Prices have come done alot, but a correction period was needed. I think buyer confidence is picking up (atleast up here) a bit. Rental rates have not dipped at all up here as there has been more renters on the market due to housing foreclosures etc. Keep positive and do not convey anything negative in conversation.
So,lender have tight regulations now in lending, they should have done that before, this economic meltdown might not happened. Yes, the best thing to do to sell a house to day is to make it look good for the buyers,with fixed it with good quality material and price is just right. Cheers, Michael McLaughlin, Cary real estate
Personally I think that Fair Housing has to be modified or done away with altogether. Most especially the Familial Status protected class. I know of several situations where two or three single guys bought a property as an investment, and one walked away when things went bad and the other two soon followed suite. Ditto with unmarried couples. At one time (prior to 1992) a lender could demand more money down or charge a higher rate of interest since these people were considered risky. I can remember a lender saying to me more than 20 years ago, "If they won't commit to each other then they aren't ready to commit to a home".
A look around the land verifies that sentiment, IMO.
Lenders are forced by Federal law to make loans they wouldn't if they had the discretionary ability that they used to.
As the housing market downturn continues, one thing is clear: Folks are having a tough time selling their homes. And if that isn't enough to concern home sellers, here's another: the commission they will have to fork over to real estate broker. I hope they are now realizing that pricing is the most important factor.
Cheers,Harry,Panama real estate.
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It will be even more difficult to sell a house in 2012 because of the new mortgage reforms. Many prospective would be home owners will not be able to meet the new stricter requirements.
Here we are in 2011 and guess what? Price is still what's moving real estate here in San Antonio, TX. Condition is great, but sellers need to be thoroughly educated that it's price that determines the fate of a home selling.
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