Why setting the right listing price is essential when selling your home...
As we all know we are in the down cycle of our local real estate market with prices currently hovering around 2004 levels or lower. The Beach Cities have been fairly fortunate compared to the rest of California real estate and have not had huge numbers of foreclosures. However I expect we will see more foreclosures and short sales on higher priced properties in the coming months... not record numbers but probably enough to influence home prices.
So what does this mean if you are thinking about selling your home? Along with all the givens of selling... clear the clutter, paint, spiffy up the landscaping, etc... the # 1 item on your list should be pricing at or slightly below the current market value. This is not the market to test the waters, so to speak,
when it comes to pricing.
Buyers are looking for value... and value can mean $600,000 or $6,000,000 depending on the property. I'm seeing a number of homes priced over market that just sit. I know many of these sellers priced their homes on the high side as they expected to negotiate the price to reach their desired price. Unfortunately many buyers who set price limits are not willing to look at homes priced over that limit in the hopes the seller will negotiate.
Buyers don't care that you paid $XXX three years ago. Buyers are only concerned with what the home is worth now. The homes that are selling in today's market are priced to sell and those that aren't selling are priced too high. The only thing that happens when you chase the market down is that you lose more money then if you priced it right in the first place.
Often buyers not only perceive a listing as "old" they also believe there may be something wrong with it. Consequently even when a seller eventually lowers the price, the house carries a taint of something not quite right about it. This leads buyers to often dismiss a property or if they do take a look and make an offer it will be substantially lower then if the price had been on target when it was first listed.
Another major issue is appraisals. Appraisers are now only looking at values on homes that sold within the last 90 days and often the last 60 days. Proximity along with time is a real issue. You see this in East Manhattan on homes selling north of Manhattan Beach Blvd. In the old days appraisers would take any sale within 1-1.5 miles in all of east Manhattan. Now they start with homes closer to the subject property and if there are enough comps they use them even if they are lower rather then move to homes sold south on Manhattan Beach Blvd. The same is true for North Redondo when dealing with properties north and south of Artesia. You can't justify a value on a property south of Artesia by using comps north of Artesia.
There are a number of homes in all price ranges that have been sitting for months at the same price with no offers. As sale numbers continue to decline as we enter the fourth quarter there will be fewer comps available to appraisers and owners who are trying to establish value. Don't expect to get the same amount that your neighbors did 6 months ago... in this market expecting less may ultimately mean receiving more at the end of the transaction.