It's Spring - Is it Time to Reduce My Price?
April 22, 2009
There are a number of properties that have been listed for sale for well over half a year and some for almost two years. There are also many properties that sell in 30 days or less. What is the reason for this different marketing time?
Location. Condition and Price.
Sort of similar to Gertrude Stein's famous quotation "A rose is a rose is a rose." A location is a location is a location. In real estate, a location is what it is. A house is located in a particular lace and where it is located is fixed, probably forever, ( Of course, some historic houses have been moved in order to preserve them.) In a rising, frantic market such as we experienced in 2004-2006, location became less important as buyers frantically wanted to purchase a property before they would never be able to own a house. As a market declines, the Location, Location, Location mantra has become alive and well - except when prices fall to unimaginable lows such as we have seen in some local markets of the Inland Empire. Did you ever think you would see a decent home, maybe only 5 years old, for less than $100,000?
Lets talk condition. Professional "Stagers" came to prominence in the boom years. All sellers wanted their property to look model-home perfect. Obviously a good thing if the staging also including updating and some basic system maintenance. With home inspectors examining the minutest detail, it was believed that the condition of a property listed for sale needed to be perfect. The present market with its glut of foreclosed properties belies the belief that the condition need to be perfect. For any agent or buyer who has looked at many of the bank-owned properties, they are disasters. No appliances, soiled and damaged carpeting. dead or dying lawns, etc.,etc. Yet these properties are the ones that are selling almost the day they hit the MLS.
That brings us to price. The data indicates that condition and location are taking a back seat to price. Houses that sold 2-3 years ago for $400,000 to $500,000 that are now being brought to market by banks at $200,000 to $300,000 are selling.
So what is a poor, traditional seller to do, If a seller today wants to sell and the property has been on the market for 150 days or more, the seller is not going to be able to reduce the price by
a few thousand dollars. The price reduction will need to be substantial enough to get buyers and agents attention. Case in point: a house was listed for the better part of a year at $600,000. A few weeks ago it was reduced to $450,000. Within two weeks the property had a buyer and is now in escrow. Sellers who need to sell in this market, may have to follow this example. If you reduce at all, make it BIG.
There are a number of properties that have been listed for sale for well over half a year and some for almost two years. There are also many properties that sell in 30 days or less. What is the reason for this different marketing time?
Location. Condition and Price.
Sort of similar to Gertrude Stein's famous quotation "A rose is a rose is a rose." A location is a location is a location. In real estate, a location is what it is. A house is located in a particular lace and where it is located is fixed, probably forever, ( Of course, some historic houses have been moved in order to preserve them.) In a rising, frantic market such as we experienced in 2004-2006, location became less important as buyers frantically wanted to purchase a property before they would never be able to own a house. As a market declines, the Location, Location, Location mantra has become alive and well - except when prices fall to unimaginable lows such as we have seen in some local markets of the Inland Empire. Did you ever think you would see a decent home, maybe only 5 years old, for less than $100,000?
Lets talk condition. Professional "Stagers" came to prominence in the boom years. All sellers wanted their property to look model-home perfect. Obviously a good thing if the staging also including updating and some basic system maintenance. With home inspectors examining the minutest detail, it was believed that the condition of a property listed for sale needed to be perfect. The present market with its glut of foreclosed properties belies the belief that the condition need to be perfect. For any agent or buyer who has looked at many of the bank-owned properties, they are disasters. No appliances, soiled and damaged carpeting. dead or dying lawns, etc.,etc. Yet these properties are the ones that are selling almost the day they hit the MLS.
That brings us to price. The data indicates that condition and location are taking a back seat to price. Houses that sold 2-3 years ago for $400,000 to $500,000 that are now being brought to market by banks at $200,000 to $300,000 are selling.
So what is a poor, traditional seller to do, If a seller today wants to sell and the property has been on the market for 150 days or more, the seller is not going to be able to reduce the price by
a few thousand dollars. The price reduction will need to be substantial enough to get buyers and agents attention. Case in point: a house was listed for the better part of a year at $600,000. A few weeks ago it was reduced to $450,000. Within two weeks the property had a buyer and is now in escrow. Sellers who need to sell in this market, may have to follow this example. If you reduce at all, make it BIG.
posted by shirley harry at 8:16 PM
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