Check out the article by Les Christie on CNN Money.Com Housing Market Pain Not Revealed by Stats. This excellent article points out the reasons why what you read about prices in the papers and what is happening in your neighborhood can be totally different.
The author notes that real estate is local and what's happening in your market may not be the same thing as what is taking place in another market 200 miles away. Another factor noted by the author concerns price expectations in the marketplace. In our market buyers are stunned when they go house hunting in Manhattan, Hermosa or Redondo and find that home prices while lower haven't dropped as significantly as they had hoped.
Many buyers , after all the news stories, were counting on prices declining at least 30% and are perplexed when their expectations are not met in the marketplace. Not only have prices not seen drastic declines; in some cases prices are actually increasing... Strand property is selling above 2004-2005 prices with multiple offers.
Sellers, on the other hand, have the opposite problem. As noted in the article when Joe's house down the street sells for $X it is common for sellers to think their house must be worth $XX.. when in fact it is only really worth $X. Sellers place their expectations higher then they should be and consequently are disappointed by the actual value. In this market over pricing is the kiss of death for a property. Yet I still hear sellers and their agents talking about putting a home on the market for $XXX to test the market and will reduce to $XX after 30 days.. when the real value is only $X. Not only do these sellers lose valuable marketing time... best time to get your price is when listing is new... they may ultimately sacrifice price as the listing becomes OLD.
The real key to buying and selling in our current market is to be realistic.
SELLERS:
- Only use recent market comparables, sales and listings less then 3 months old. It doesn't matter what the house down the street sold for 6 months ago.. that was a different market.
- Don't test the market with a higher price. If there are 10 homes for sale in the neighborhood priced at $X and they haven't sold then pricing your home at $XX makes no sense.
- Buyers don't make low ball offers on over priced properties. All sellers think that if they price a home high then someone will make an offer. Nope, not going to happen.. Buyers looking for homes priced at $800,000 or less only look at homes in that price range. They won't assume that you would take $750,000 for a home priced at $975,000.
- Make sure you home is in good shape. This doesn't mean a new addition or complete remodel but it does mean clean. Consider the services of a stager. As the competition grows you need to make every effort to make sure you stand out in a good way.
BUYERS:
- Buyers need to raise their expectations to a realistic level. No matter what the Bubble Bloggers say you are not going to buy a Tree section home for $600,000. If prices ever drop to that level you can bet it's because the economy tanked and you probably won't have a job so you can't buy it then either.
- Stop waiting for the perfect house. There is no such thing. Ask anyone who has ever buuilt their perfect home and they will tell you all the things they would change next time.
- Flipping for Profit is OVER. Actually it never really worked as a good financial strategy for most people. There were a few at the start of the upswing that made money.. but most who profited from the market had owned their homes for 3+ years. Flipping is a highly speculative way to make money and is closer to gambling in Vegas then sound financial planning.
- The time to buy is when you need to buy. If you are living in a 1 bedroom 1 bath condo and you find yourself with twins it's time to buy. You won't know that you got a great deal until you sell in 5-7 years and make a nice profit. Good deals usually happen after the fact.
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