How does a "Traditional" Seller Compete?
June 18, 2009
In the present real estate sales environment there are several categories of sellers; the banks, investors, the short seller, the developer and the traditional.
Banks, as owners of foreclosed real estate, are generally motivated to sell quickly and are often pricing their properties at bargain prices. Even though many of these properties have condition issues, buyers are willing to purchase them because of this bargain perception. It is not unusual for a property to have multiple offers and to sell over the bank's listed price even though the purchaser may have significant "fix-up+ costs.
There are not a great many investors in the real estate market at the present time as making a profit on the sale of real estate is a difficult goal to attain. Some investors have learned the hard way that buying a property at what looked like a real bargain and fixing it up to sell again is just not a very successful way to get a return on your investment. In this market, investors are more likely to buy property and rent it.
Then we have the short sale sellers. These are the sellers who owe more than the house is currently worth and are hoping to obtain their lender's approval to reduce the debt owed so that the property can be sold and not have to go to foreclosure. These properties also need to be priced attractively in order to receive offers from potential purchasers. Buyers have learned that the list price has often not yet been approved by the lender and that the lenders approval can take weeks, and months to obtain. For this reason, prospective buyers are not very anxious to look at the short sale listings.
Then we have the developers offering their unsold inventory at greatly reduced prices and with a great many buyer incentives. Also, the state of California has offered the purchasers of new, never occupied homes a $10,000 bonus.
Then we have the "traditional" sellers. These are folks who for a variety of personal reasons want to sell their properties. A "traditional" seller is one who a)is not under a threat of foreclosure and b) may be moving out of the area or c) has decided to purchase another home.
The issue in this market is that the traditional seller must compete to sell in a "price driven" market. No matter how beautiful and well-maintained a home may be, buyers are not willing to pay more for these properties than they would pay for the last foreclosure in the neighborhood.
How can these sellers compete?
The traditional seller needs to be certain that the property is in almost model home condition. The traditional seller can offer to pay a buyers closing costs. It is almost routine for a seller to offer to purchase a home warranty plan that covers systems for the first year of ownership.
A traditional seller, in order to compete, must take seriously a market analysis done by a real estate professional. the zestimates of zillow or realestateabc are interesting, but the most accurate estimate of current market value will be a local real estates comparative market analysis. These CMAs are a bit tricky as there have been so few sales in the upper end of the market and in the lower end the sales are generally properties offered by the other categories of sellers.
"Traditional " sellers can compete but they must be realistic about their competition and about what is motivating buyers .
In the present real estate sales environment there are several categories of sellers; the banks, investors, the short seller, the developer and the traditional.
Banks, as owners of foreclosed real estate, are generally motivated to sell quickly and are often pricing their properties at bargain prices. Even though many of these properties have condition issues, buyers are willing to purchase them because of this bargain perception. It is not unusual for a property to have multiple offers and to sell over the bank's listed price even though the purchaser may have significant "fix-up+ costs.
There are not a great many investors in the real estate market at the present time as making a profit on the sale of real estate is a difficult goal to attain. Some investors have learned the hard way that buying a property at what looked like a real bargain and fixing it up to sell again is just not a very successful way to get a return on your investment. In this market, investors are more likely to buy property and rent it.
Then we have the short sale sellers. These are the sellers who owe more than the house is currently worth and are hoping to obtain their lender's approval to reduce the debt owed so that the property can be sold and not have to go to foreclosure. These properties also need to be priced attractively in order to receive offers from potential purchasers. Buyers have learned that the list price has often not yet been approved by the lender and that the lenders approval can take weeks, and months to obtain. For this reason, prospective buyers are not very anxious to look at the short sale listings.
Then we have the developers offering their unsold inventory at greatly reduced prices and with a great many buyer incentives. Also, the state of California has offered the purchasers of new, never occupied homes a $10,000 bonus.
Then we have the "traditional" sellers. These are folks who for a variety of personal reasons want to sell their properties. A "traditional" seller is one who a)is not under a threat of foreclosure and b) may be moving out of the area or c) has decided to purchase another home.
The issue in this market is that the traditional seller must compete to sell in a "price driven" market. No matter how beautiful and well-maintained a home may be, buyers are not willing to pay more for these properties than they would pay for the last foreclosure in the neighborhood.
How can these sellers compete?
The traditional seller needs to be certain that the property is in almost model home condition. The traditional seller can offer to pay a buyers closing costs. It is almost routine for a seller to offer to purchase a home warranty plan that covers systems for the first year of ownership.
A traditional seller, in order to compete, must take seriously a market analysis done by a real estate professional. the zestimates of zillow or realestateabc are interesting, but the most accurate estimate of current market value will be a local real estates comparative market analysis. These CMAs are a bit tricky as there have been so few sales in the upper end of the market and in the lower end the sales are generally properties offered by the other categories of sellers.
"Traditional " sellers can compete but they must be realistic about their competition and about what is motivating buyers .
posted by shirley harry at 7:39 AM
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