How to Price a Home to Sell
Call us crazy, but please don't call us stupid or late for dinner!
We passed up a couple of possible listings this past week. One seemed a done deal except the seller wanted to raise the asking price of a home that had been on the market for some time and was getting no action. The other was an owner wanting us to list at 4%. In today's market, you pretty much have to offer the buyer's side a full 3% to get agents to even bring their clients by for a look. 1% split between us and the broker, minus expenses didn't sound that appealing.
I failed to mention that both sellers are aware that there are a lot of houses on the market and sales are challenging. Both sellers were thinking that we would throw a lot of marketing energy and money away trying to bring in the buyers. You can't bring a buyer into an overpriced house when there is a home down the street with more square footage, more upgrades, better landscaping, and a lower price.
For those who have not been following the news, here are a few tidbits off the wire:
- There were 4.6 million existing homes for sale in July 2007, up 19% from July 2006, according to the National Association of Realtors. And on Sept. 5, the Realtors said that the July Pending Home Sales Index–a forward-looking sales indicator–fell sharply. Inventories of homes for sale in July rose 5.1% to 4.59 million, or about 9.6 months of supply at the current sales pace. A six-month supply of homes for sale is generally the norm in a balanced market.
- According to data provider RealtyTrac, foreclosure filings are up 93% in July from the previous year — or one foreclosure filing for every 693 households. Foreclosed homes are hitting many housing markets already saturated with unsold inventory.
- Countrywide, the nation's largest and recently most-embattled mortgage lender, announced it was laying off as many as 12,000 people today, roughly one-fifth of its 61,000-strong workforce. In a letter to employees company founder and CEO Angelo Mozilo called the current slump "the most severe in the contemporary history of our industry." He said home price appreciation had "stopped dead in its tracks," that there had been increased delinquencies in "far too many borrowers" and that the secondary market for jumbo loans and those that don't qualify for government-sponsored insurance "has become nearly illiquid."
- “If someone walks in today with an A-plus credit history and a $200,000 salary but no money for a down payment, I can’t help them anymore,” said Michael Menatian, president of Sanborn Mortgage Corp. in West Hartford, Conn. The company was notified by its lender earlier this month that the lender no longer will cover no-money-down loans.
If you need to sell your house, here is a winning formula: Price it in the bottom third of comparable listings. Make sure it shows better than 70% of the competition. Sellers following this formula are getting multiple offers in this market and closing the deal pretty much for the asking price.
One in every 52 people in the state of California has a real estate license. You can't swing a sack of walnuts without hitting at least one. Find a few that work the business full time and ask them how many sellers are out there making the mistake of following the market down. Answer = if your house has been on the market for over 90 days and you have reduced the price at least once and nothing is happening - you are.
Regardless of market conditions, homes that are priced right sell. You may not be able or willing to price it according to the market, but if you do, it will sell in a timely fashion - especially in the East Bay area of California.
