I held an open house in Hermosa Beach last week. The home is new construction and west of PCH. It has 3245 sqft feet with 4 bedrooms, city and ocean views and a roof top deck. The price is $1,879,000. This is one of those homes that feels good when you walk inside.
One visitor liked it so much he had his wife drive over. As he and I were chatting he made a remark about the price. He told me he was surprised that the price was so reasonable and asked me why..... my response was that the owner/builder wanted to sell the house. He looked at me for a minute and responded that he wished more sellers had that attitude.
I thought his response spoke volumes about our South Bay/Beach Cities real estate market. I have a number of clients looking in the mid-level price ranges in Manhattan, Hermosa and Redondo. They all have cash for a down-payment, good credit and are realistic about the market. They want to buy. Two bought last month and the rest are still looking because the homes they would like to buy appear to be priced over their market value.
How do I know this...... because the homes priced at market value are selling and usually with multiple offers. The ones over market value continue to sit on the market month after month. If market value for your property is $750,000 don't list it at $800,000 hoping someone will make a lower offer... they won't. On the other hand listing at $4,500,000 and all the other sales in the area have been at $4,700,000 is a good move because it is slightly under market and will generate a lot of interest. It astounds me when I see a home that is priced right at $1,795,000 sell immediately while another home that is similar in age, sqft , style and condition gets priced at $2,100,000 or $2,300,000 and... surprise... no takers. I want to ask these sellers .. what were you thinking.
Home and townhome inventory in the South Bay/Beach Cities continues to go up as sales decrease and no one seems to have made the connection. Now if you have been reading my blog you know that I think the South Bay market will survive relatively intact as we didn't have a huge number of investors or buyers using sub prime financing. That doesn't mean we haven't seen a shift in the market with a slight decrease in prices last year and a pretty flat market this year.
Perhaps many sellers don't have to sell their homes and are just testing the market so they don't care what the real market value is and can afford to sit for a long time. But I know there are others who need to sell and by not pricing their homes realistically they are actually losing money because they will wind up chasing the market when they should be making the market.
A very good friend of mine is an agent in Long Beach. Truth is she is one of the best agents in the area.. I call her the Queen of Long Beach. Her name is Laurie Manny and she recently wrote an an article about Pricing a Home to Sell that I thought was excellent. While our market is in significantly better shape then her market; sellers still need to be smart about pricing. This will be very true if rates go up in the next few months. The FED is antsy to raise rates as they are more worried about inflation then the housing market. Think about it.. with mortgage rules tightening in the last few months many buyers have had to postpone buying or reduce their purchase price.
Not all homes in the Beach Cities are overpriced. Some are priced at a level that takes more time because there is a limited pool of buyers. Homes that are highly contemporary in design always take longer to sell then more traditional style homes. But there seems to be a lot of properties that have been on the market over 60 days and a large number of those have been around longer then 90 days.
One of the big differences between this year and last year at the same time is that there are a lot more buyers in the market. They want to buy and are not waiting on the sidelines as they did last year. If you have qualified buyers and your home is not selling it might be time to rethink either the price, the condition or both if you really want to sell your home.
If your home has been on the market longer then 60 days and you need to sell then a major price reduction is something you should be thinking about. Reducing the price $10,000 on a $2,000,000 home isn't going to be enough to spark interest and certainly not an offer. On a $500,000 property a $10,000 reduction makes more sense but may not be enough in some circumstances. On a $5,000,000 you may need to think about a $ 200,000 reduction as opposed to a $50,000 price change.
Review prices of those homes that have sold that are similar to your home.. If three homes sold at $1,800,000 - $1, 875,000 and you are still listed over $2,000,000 with no interested parties ..... it won't get better. I've actually seen a few homes that sat for months who decided to increase the price.. Sorry but the year is 2007 not 2003 and raising the price in a flat market is usually not your best market plan.
The guy that priced his home at the right price has sold and moved on to a new home or perhaps to a new job in a new location. He took the money and with cash in hand was able to strike a better price and probably a better interest rate on his loan. In this market the longer you wait the bigger chance you take that interest rates will rise and prices may soften.
Just because you love your home doesn't mean it's worth more then the market recognizes as value. No one is smarter then the market... no one.
Beach Cities: Sold May 2007
Beach Cities: Sold April 2007
Beach Cities: Sold March 2007
Beach Cities: Sold February 2007
Beach Cities: sold January 2007
Beach Cities Sold: Sold 2006 Vs 2005
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