Selling 101
August 28, 2007
The first headline I saw as I opened the San Bernardino Sun Newspaper this morning was "How to Sell a House". The article references a number of strategies that agents and sellers are using to entice buyers to make an offer on a listed property. Some of the incentives mentioned are gift certificates, new paint, new kitchens, new carpet, paying buyer's loan costs. Probably all of these work some of the time, but there are no guarantees that any will, in fact, sell the house. The benefit to the seller of doing home improvements is that the seller can enjoy the new kitchen, new carpet and fresh paint. One of the reason, sellers like offering gift certificates and loan buy-downs or loan costs is that there is no out of pocket expense if the house does not sell.
Unfortunately, we are entering a selling environment in which price is the most attractive incentive. Seemingly the incentive for which buyers have been waiting is the drop in prices. Exactly what the magic percentage drop will be is an open question.
It is interesting to me that back in the mid 1990s when the market was equally difficult, an author came out with a book that suggested that if your agent did a market analysis, you looked at the comparable sales and listed your house at 10% under the most comparable sales price. The theory was that ultimately you would get multiple offers and would be able to sell at the comparable value.
I have seen this technique work, however, sellers are often reluctant to try it.
They will reduce what seems like a great reduction ($10,000 or $20,000) and are disappointed that the buyers still do not come forward and write offers.
Take for example: Comparables show a comparable market value of $450,000.
Seller reduces by $20,000. thinking that is huge. $430,000.
Another seller reduces by 10%. $405,000.
Which will attract more attention?
To be able to use this strategy, a seller will need to have enough equity to pay off his loan and to pay sellers costs. The question in this market is whether sellers have enough equity to reduce the listing price to reach the competitive advantage.
The first headline I saw as I opened the San Bernardino Sun Newspaper this morning was "How to Sell a House". The article references a number of strategies that agents and sellers are using to entice buyers to make an offer on a listed property. Some of the incentives mentioned are gift certificates, new paint, new kitchens, new carpet, paying buyer's loan costs. Probably all of these work some of the time, but there are no guarantees that any will, in fact, sell the house. The benefit to the seller of doing home improvements is that the seller can enjoy the new kitchen, new carpet and fresh paint. One of the reason, sellers like offering gift certificates and loan buy-downs or loan costs is that there is no out of pocket expense if the house does not sell.
Unfortunately, we are entering a selling environment in which price is the most attractive incentive. Seemingly the incentive for which buyers have been waiting is the drop in prices. Exactly what the magic percentage drop will be is an open question.
It is interesting to me that back in the mid 1990s when the market was equally difficult, an author came out with a book that suggested that if your agent did a market analysis, you looked at the comparable sales and listed your house at 10% under the most comparable sales price. The theory was that ultimately you would get multiple offers and would be able to sell at the comparable value.
I have seen this technique work, however, sellers are often reluctant to try it.
They will reduce what seems like a great reduction ($10,000 or $20,000) and are disappointed that the buyers still do not come forward and write offers.
Take for example: Comparables show a comparable market value of $450,000.
Seller reduces by $20,000. thinking that is huge. $430,000.
Another seller reduces by 10%. $405,000.
Which will attract more attention?
To be able to use this strategy, a seller will need to have enough equity to pay off his loan and to pay sellers costs. The question in this market is whether sellers have enough equity to reduce the listing price to reach the competitive advantage.
posted by shirley harry at 9:06 AM
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