or How to Sell a Home in a Crazy Low-Down Real Estate Market - Part 1: Price
Do you remember hearing these three pearls of real estate wisdom?
Location, location, location!
In the olden days that was the most important factor of what to look for when buying a home. Location was the end all and be all, and it's still really important because it's the one thing you cannot change about a house (unless you move it.) But times and the market have changed.
Today's mantra has become:
Price, Condition, Location!
Today we're talking about
PRICE.
The good news is the lower prices out there in real estate land are
nudging buyers back into the market, and they are bargain shopping.
According
to the Multiple Listing Service of Northern Illinois, which encompasses
all of Chicago and its suburbs, more existing homes sold in June, July
and August 2009 then in the same time period in 2008. Yea, a
promising statistic at last!
The reason for this upswing in sales is
home prices have dropped by 20% on average over the same time period
last year. That coupled with the government's $8,000 tax credit for
first time buyers, low interest rates, and the surplus of short sales
and foreclosures on the market, has coaxed buyers to come back to the
closing table.
So, real estate is not an exact science, but here are the things that
I've seen work in getting homes sold today. Remember this is the
opinion of just me, the Real Estate Mom.
Selling today is not for the faint of heart. My advice is sell now if
you have to (a job transfer, retirement, distress situation) or if
you've lived in your home for a long time and have a lot of equity. You
may sell at a reduced price, but you should also get a good value on
your "buy" end. Many experts feel home prices will continue to
depreciate for another year, so if you need to sell in the near future
sooner may be better than later.
When you list your home, price it under the best house in your
particular price range (your Realtor will show you all the comps.)
Here's a personal story: My husband Tom and I were investors in Florida
real estate for 3 years. When we sold our properties we always used
local Realtors, and we actually had to argue with our Realtors to get
them to price our homes where we wanted...
under the market.
At
the time we were investors, the market was RED HOT and we could have
gotten more for our homes, but we had a philosophy and
our intention was to sell right away to avoid carrying costs. Guess what! We sold everything
before the crash and boy are we grateful.
Right now price is
so important.
-This is not the time to "test" the market at a higher price.
-Remember that fair market value has nothing to do with what you WANT
for your house, or what you put into your house, or what your neighbors
got for their house 3 years ago. Fair market value is what a buyer is
willing to pay for your house in today's market.
-Check out your
competition. Why would a buyer buy your house when the house down the
street is priced for less and has more amenities?
-Be realistic about
your house and try to take the emotion out of it. Look at it as a
product. That's hard to do, but very necessary today.
The real estate market today is a
"price war and a beauty contest."
I love that saying because it really covers it all.
In today's market your home has to be priced fat-free and has to look like Angelina Jolie on Oscar night.
We've talked about pricing your house "fat-free," next week I'll share tips on how your house can look like Angelina Jolie. Don't miss it!
See you next Wednesday.
-Pam,
The Real Estate Mom
5 Comments
Joel K said:
Excellent advice!! We got our full asking price in one day last summer using the same approach. There were 4 comps and we priced just under the lowest one. Like you said, it's hard to look at housing as a commodity but it can get expensive if you don't. Of the four comps, one sold a week after ours for essentially the same price. One sold for much less then ours. One is being rented. And the last one is still for sale. I shake my head and thank the Lord every time I drive by them. You also have to ask yourself, is it worth another 5% to go through the hassle of showings and stress? The house we bought was on the market for 8 months and they came down 20% off the asking price. If they had been honest with themselves from the beginning they probably would've gotten more for their house without all the stress.
Stephanie Walker said:
Joel, you're so right and it makes me cringe to look back at the mistakes we made. When we first listed our house in August 2008, we had someone ask our Realtor if we would be willing to sell the house for the price we paid for it. Well, at the time... the house had only been on the market a couple of weeks and we had put so much money into the house we couldn't fathom selling it for that. It was worth so much more!
Well... 11 months with it sitting on the market showed us it wasn't. In fact we ended up selling it for 100 K less than what we paid for it. We've looked back on that moment so many times. I think the bottom line is that we just weren't ready to leave our house. We thought we could save it and selling wouldn't be a necessity. We were delusional. And not willing to be honest with ourselves.
We paid the price.
But we did learn soooooooo much in the process as you know from reading the blog. (and thank you for always commenting!)
But you guys were smart to be so logical and level headed.
I also love what you said about questioning whether or not it's worth another 5% to go through the hassle of showings and stress. It's such a good point that isn't always taken into consideration. Showings are a hassle and stressful.
Thanks for sharing your scenario. I'm glad you got your full asking price in one day! Kudos!
mandy said:
I,too, agree....excellent advice. That is exactly what my new son-in-law did to sell his condo and it worked perfectly.
Thanks Real Estate Mom
Tom F said:
Great blog. Great advice. Right on the money. I work as an assistant for a real estate agent and I am always surprised that people do not want to listen to a professional. "Price it low and watch it go." "Price it high and watch it die."
Stephanie Walker said:
Mom,
This is excellent advice. Wonderful post!
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