Mike’s Real Estate Show

My, have things changed! And yes, they usually do don’t they? This market over a year ago had Sellers “taking” offers at their liesure. They would stack up like cord wood. We would sift through them and pull out the “best” or the one with the biggest “overbid” to “consider” counter-offering!! But we’ve “shifted” and now the SELLER is having to entice a would-be buyer with some of the following ideas which we’ve taken from an article in the Wall Street Journal and provided to me by Marc Kahn of Sutter West Mortgage (mkahn@sutterwest.com). Read on for some great new ideas!

By RUTH SIMON   WALL STREET JOURNAL
September 28, 2006; Page D1
 

As the housing market cools, one of the hardest decisions facing home sellers is how to price their properties.

Traditionally, brokers have set listing prices by reviewing how much comparable homes sold for in a neighborhood. Now, with prices edging lower in many places and the number of homes on the market climbing, checking comparable sales is becoming less useful. At the same time, many would-be buyers are sitting on the sidelines, waiting to see how far prices will fall. Bigger inventories of unsold homes also are making it harder for sellers to figure out how to make their house stand out amid the competition.

Note how the above paragraph downplays the “comparable” sales. When I talk to Sellers today I’m increasingly talking “competition” and what incentives the competition is offering.

Sellers are also being told to cut prices aggressively if their house isn’t moving — or risk chasing the market downward. If a home doesn’t get any showings in 21 days or gets 10 showings but no offers, Ned Redpath, president and owner of Coldwell Banker Redpath & Co. in Hanover, N.H., often advises the seller to slice the asking price by 10%. “We don’t like to see $2,000 or $5,000 price adjustments,” he says. “We want to see a real whack” that attracts attention.

The renewed emphasis on pricing represents a dramatic turnabout from the heady days of the housing boom, which peaked in the middle of last year. Bidding wars were common and, in many markets, homeowners simply looked at the last sale and asked for more.
That’s all changed. The National Association of Realtors said this week that the median sales price of existing, or previously owned, homes fell 1.7% to $225,000 in August from a year earlier, the first such drop in 11 years. There’s now a 7.5-month supply of existing homes on the market, the most since April 1993.

 

If we look at our local market we see over 2500 “Active” listings with another 600 in “escrow” as contingents or pendings. Our medium price is around $575,000 with those in escrow having a medium of $575,000 and those “Actives” having a medium of $615,000. You can see the Sellers are still asking more than the market can bear.

 

With so many properties vying for attention, sellers are also looking for creative ways to catch the eye of would-be buyers and their brokers. Some sellers are offering to pay closing costs or provide other incentives. When their 3,500-square-foot carriage house in Exton, Pa., failed to sell this spring, the owners dropped the asking price twice, to $449,000 from $479,000, says Beth Koser, an agent with Prudential Fox & Roach, Realtors. When that didn’t do the trick, the couple agreed to offer $10,000 toward closing costs to any buyer or agent who attended an open house within a two-day period. The home sold  later for $430,000. “The incentive created a sense of urgency,” says Ms. Koser. Buyers “saw that the seller was willing to negotiate.”

..,incentives homeowners can offer, from paying the mortgage for several months, to outfitting a media room with a big-screen TV, to picking up the cost of day care for some period.

 

And with more buyers hunting houses online, selling strategies are adapting to the new technology. Michael Gallagher, a financial-services executive, initially listed his four-bedroom house in Shawnee, Kan., at $274,500. When the listing expired, Mr. Gallagher’s new broker suggested that he boost the price to $275,000. Within weeks, the home sold for $271,000, $36,000 more than the best previous offer.
The explanation? Buyers who use the Internet typically search in increments of $5,000 or $25,000, says Kerwin Holloway, a managing broker with Reece & Nichols, a unit of Berkshire Hathaway Inc., which handled the sale. At the higher price, Mr. Gallagher’s home was likely to turn up in more searches. It also looked like a bargain to someone whose search started at $275,000. At the lower price, it was one of the most expensive homes priced between $250,000 and $275,000. Until recently, brokers had taken their cues from retailers, pricing a home at $199,500 because it seemed like a better deal than one priced at $200,000.

 

A property that’s not priced properly can languish on the market and get shopworn, says Dan Elsea, president of brokerage services at Real Estate One in the Detroit area. A four-bedroom house in Troy, Mich., has been sitting on the market for 10 months, even though the price has been cut to $349,900 from $394,900, Mr. Elsea says. By contrast, a similar home in the same market sold this month for $360,000, just 23 days after it came to market priced more appropriately at $369,000, he says.

These are just some of the ideas savvy Realtors are using to get their Sellers to stand out from the competition. Remember that the National Association of Realtors (NAR) tracks sales throughout the nation and makes this data available to Realtors only. One of those stats is this; if you have 10 showings you should be generating an offer. Is your property being sold but with no offers? Time to re-read this article and have a serious discussion with your Realtor as to what you can do to stand out from the competition. Remember, it doesn’t always mean lowering your price.