Pricing More Important Than Ever
(Selling a home in this slowing market is a very hard and frustrating process, not to mention time consuming.)
With the surplus of homes on the market today, it is taking home that used to sell in a week during the housing heyday, months to sell now.
With slowing home sales, both real estate agents and homeowners now realize that the price of their home makes the biggest difference in whether it gets sold or not. If they do not have a competitive enough price, chances are a potential buyer can find a house just like it down the street.
The cooling housing market has definitely left us with a renewed interest and emphasis on pricing; both for regular home owners and mega-corporate home builders.
Now, people not only have to pay attention to the aesthetics of their house so it is appealing to potential buyers, but also to the price now more than ever.
A September 28, 2006 article by Ruth Simon of The Wall Street Journal, "Pricing your home gets trickier," looks at how sellers test different strategies to entice sellers to buy their homes.
One of the biggest problems that is posed during the slow market is "comparables." A comparable is a home that is similar to the property being sold and we look at the price that the comparable sold at to get an idea of what price to list the for-sale home. But there are many problems with this in a cooling market.
"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."
Brokers and real estate agents are now paying more careful attention to price trends in surrounding areas as well as checking those trends more frequently, since things can change drastically in a relatively small amount of time.
This also marks a time when the median price of homes fell from year-over-year in over 11 years. This just solidifies the fact that prices really are dropping, and homeowners and their agents must price accordingly, no matter how difficult it is to do that.
"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."
Besides offering incentives, some are going straight for the dollars, which matter to buyers the most. Many people are listing their home for below what it would normally sell for to generate a buzz.
"Some brokers are trying to trigger bidding wars by setting an asking price sure to attract attention. Romeo Aurelio Jr., sales manager for Century 21 Hartford Properties, recently listed a small one-bedroom, one-bath fixer-upper in San Francisco's fashionable Noe Valley neighborhood for $650,000, even though he figured the home would sell for $100,000 above that. 'If we priced it at $750,000, it was going to sit,' Mr. Aurelio explains. 'We marketed it aggressively at $650,000 and it generated 20 offers.' The house sold this week for $845,000."
Whatever your strategy for pricing your home to sell, whether incentives or discounts, it is important that it is realistic. Although it may be hard to list your home for a price that is way lower than you initially expected, it will probably be the only thing that will get it to sell.