I am working with a number of home buyers who are looking in every Beach City.. Manhattan Beach, Hermosa Beach, Redondo Beach and El Segundo. My clients' price ranges vary widely as do the types of properties they want to purchase.
There are some things all Beach City home and townhome buyers have in common.. trying to figure out what to offer on the homes they want to buy. Smart sellers don't want to overprice their homes... but they want a reasonable price for their property. Sellers who put their homes on the market are usually not doing it as a way to meet new friends.
Smart Buyers don't set out to insult a seller with a low ball offer; they just want to buy at a fair price.. or market value. Buyers really don't go to open houses because they have nothing better to do on the weekend. They go to open houses because they want to buy a house.
So that brings us to the dilemma of making an offer. How do you decide the right price that will make both the seller and the buyer happy? This is where you need to look at all the aspects of the market.. properties that are for sale, sold and pending.
The old rules said that comparing similar properties that sold within the last 3 months is the way to determine price. In very stable markets with a lot of similar homes that might still work but I'm not sure that thinking applies in our local Beach Cities real estate market. Most home sales close in 45-60 days from the acceptance of an offer which could be 30-90 days from the date of the listing. The time lag between listing the home and closing escrow can make the data old and no longer useful. This happens in both up and down markets as the market is changing faster then the data.
Some experts advise looking at active listings to help determine a price. But if the active listings have been on the market for a long time and haven't sold then they aren't the best source of data. 25 homes at about the same price that have been on the market for 3 months are obviously not at market value.
I think the best indication of market value is found in pending sales. The best gage is properties that were on the market less then 21 days and may have had multiple offers. This is the hot market. This is where buyers and sellers have found common ground and agreed on a price. This is true market value.
This is where savvy sellers are pricing their homes. Savvy sellers know they won't get more then market value for their home and price it at that level. This is the data smart buyers are using to determine their offering price. If a buyer likes a home he wants to buy it. Most buyers do not want to get in a bidding war or go through 15 counter offers. The savvy seller will price his home to sell and a smart buyer will appreciate that and respond accordingly. Sure there will be negotiating but it will be the type that leads to compromise and a sale.
My Dad always said that a good deal was one where all parties to the transaction walked away feeling good. I think that is still very wise advice..
Manhattan Beach/ Beach Cities: The Sellers Lament
Buyers: 7 Things to Know When Buying a House
South Bay Beach Cities: Sold June 2007
Beach Cities: Sold May 2007
Beach Cities: Sold April 2007
Beach Cities: Sold March 2007
2 comments:
Thanks for the article. I have a question, after this huge crisis do we have to expect a pull back during this year before getting into a real recovery or there's just going to be a slow recovery?
Buenos Aires RE:
That's a question I have been pondering in recent weeks... I'm seeing some very high prices on properties that don't appear warranted and believe it is due to lack of inventory rather then a recovery but I could be wrong.. won't be the first time.
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