A Pricing Strategy that works to get a home sold for top dollar and FAST!

We recently employed a pricing strategy to get a Greenbrook home sold fast…the other three agents up to list the home all recommended much higher “list” prices.

In a declining market…TIME IS MONEY…so if you are overpriced you lose opportunity.

In any market, sellers should price ahead of the curve whether it is upward or in the case of the current housing market, a downward trend. It is a hard pill to swallow for most sellers when they review past sales in their vicinity. They view those numbers as the “true value” of their home. Sellers are understandably hesitant, if not downright refusing, to price lower than those “comps”. The challenge is that if the market is coming down, their homes become the validation why other lower priced homes are a great deal.

Our wise sellers on Barrett Circle in Danville understood this, and last week agreed to price their home ahead of the last comp of $799,000. So we had 42 agents come through the Thursday broker tour, along with 5 agent showings during the four hour tour, and 3 neighbors-all of whom believed we had under-priced the home at the offer price of $779,000.

Think we under-priced the home?? Think about it. If we had priced it at the top of the market – $799K – offers would have come in under asking price as the buyer attempted to negotiate a “good deal.” At our price of $779 – it was a good deal and we received the best offer you could imagine in just a few days. In our current market, pricing at the top of the market usually results in a home being on the market 60 to 90 days or more – while the market continues it’s slide and takes the home price along with it.

We had a Twilight Wine & Cheese Tour for people just getting off work and showcased the home to another 10 families. At our Sunday open house we had over 35 showings to agents, prospects and neighbors. Sunday evening we had calls from 3 agents who had clients interested in the home.

Now the sellers home is pending after four days on the market, they do not need to prepare the home for sale everyday, and they have a strong well qualified buyer ready to close in 30 days…this is the way selling your home should be…

For more strategies on how to sell your home quickly and for TOP Dollar…contact Ginny (925) 699-3328…we know real estate, and we don’t just list homes…WE SELL THEM!
 

Home Prices Bottoming – Good Deals Everywhere

As the Assessor of Contra Costa County since 1995 and a student of the real estate market of the East Bay since 1971, I’ve never felt more compelled and stronger about advising anyone and everyone who ever thought about getting into real estate to do it now. – Gus Kramer

Kramer says that real estate values may continue to slide a bit in Contra Costa County through 2008, but now is the time to be actively engaged in the buying process. “You are never going to find it more affordable than today,” says Kramer.

Kramer tells a story of a friend who bought a home in Brentwood CA in October of 2007 for $530K. This same home was selling in August of 2005 for $890K. In March of this year a home on the same street was listed at $395K.

“We haven’t seen values this low since sometime between 1998 and 2000,” says Kramer.

Time to Invest in East Bay Real Estate

Buying a house for under $300K with today’s interest rates and soaring rental rates at a premium due to foreclosures creates positive cash flow opportunities – very rare for California real estate in the last 20 years.

Homes at the low end of the market are going to see the fastest appreciation when the market comes back. Antioch, Brentwood, San Ramon, Walnut Creek and Martinez are just a few of the Contra Costa communities with current low housing prices that are attractive to first-time buyers.

The final word from Gus Kramer – “I feel so strongly about the market going up that if you buy property in the next year and it doesn’t appreciate, I promise you, I will not raise your taxes.”

Here is a snapshot of local Real Estate inventory in Contra Costa and Alameda Counties.

The table represents aggregated values based on MLS data for the specified date.

Home values in East Contra Costa County are being affected by high foreclosure rates. This is affecting median and average list prices for the entire county. The I-680 Corridor continues to weather the downturn in the housing market better than much of the country.

Real estate is always a local business. To get more specific information on local communities request our FREE Real Estate Local Market Details.

The Power of Pricing Drives Interest, Activity and Sales

Price Drives Sales. I think most would agree. In a down housing market or an adjusting real estate market, it is important to understand local real estate market dynamics, market trends and how pricing affects interest and activity.

The National Association of Realtors has collected data on real estate sales for decades, through up, down and stagnant markets. The data collected on the power of pricing reflects 3 key points:

• Number of showings is greatest if priced at or below market value
• Generates the most interest when it first hits market
• Starting high and dropping price later misses excitement & fails to generate strong activity

The image above reflects the general sales activity for tens of millions of homes in the U.S. over many, many years. We see that the first 3 weeks of listing a home are where the activity levels builds to it’s highest point. From the third to fifth week, while activity starts declining, the overall interest is still high. From week six on, interest and activity fade.

As I mentioned yesterday in the article on chasing the real estate market down, many sellers want to price their homes high to try and maximize their net gain on the sale of the home. When home sellers want to price their home higher than our recommendation, which is based on local real estate market trends and our years of experience, we get them to agree to reevaluate after two weeks on the pricing.

The graph shows why. If we adjust the price before the three-week apex of interest and activity, we can still catch the wave. Lowering the price at seven, ten or 12 means trying to rekindle interest.

More than 75% of home sales result from the local Realtors network and the MLS. When real estate agents have looked at a home several times and shown it to clients, the home can become jaded in their minds. A slight price reduction does not overcome this inertia.

To rekindle interest in a meaningful way means a significant price reduction. It’s the nickel and diming on price reduction that costs the home seller money in the long run.

Here is a successful pricing strategy we have used in the last two years with savvy, cooperative sellers.

• Set the initial price
• Present the home at the local Realtors Marketing meeting and have it on brokers tour
• Elicit pricing feedback from the real estate community
• Monitor interest and activity for 10 days
• If no offers come in – reduce price before two week deadline
• Monitor interest and activity for 10 days
• If no offers come in – reduce price before 4 week deadline
• Monitor interest and activity for 10 days
• If no offers come in – reduce price before 6 week deadline

This strategy works well to help find the pricing “sweet spot” for a real estate market that is still trending down and has yet to settle. This is different than chasing the market down. When a client is chasing the market down, they are usually waiting two months or more between price adjustments and they are less aggressive in their price reductions.

Finding the pricing sweet spot is a very pro-active and dynamic strategy. It’s not a – well, let’s wait and see campaign. It is a definitive campaign to aggressively find the top dollar price a market will bear for a specific home.

This image, also based on years and years of sales of millions of homes, shows the percent of buyers that will look at a home based on how it is priced. Note that only 60% of buyers will look at a home that is priced at market value. If a home is priced 10% above market value, visitors drop to 30% of interested buyers. If the home is priced 10% below market value, 75% of interested buyers will visit.

Currently, there is a three to six month inventory of homes on the market for most local communities. Buyers have a lot to choose from. 

A bigger ad in the newspaper is probably not going to bring more buyers to a home on the market. Fewer and fewer buyers are using the newspaper to find homes for sale. A more elaborate 4–color brochure is probably not going to do much either.

What will get your home sold is to work with an agent that has experience, knows the market, will tell you the truth, and networks like crazy with the other professionals in the local real estate industry.

I truly believe that all of our team fits this bill – BUT – I gotta tell you – Ginny Mees is absolutely awesome. If you are thinking of selling your home – be sure to include Ginny on your short list of Realtors to interview. Email Ginny (925) 895–2694

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