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Tips to price home correctly to sell, priced within 5-7 percent of active comps, best condition best price, research active listings, visit neighborhood comps in person
The only change in my position is using the Actives to set the price instead of the Solds (in some markets). And remember that I'm tying Condition into the equation. I didn't discuss Location in that post, but Location also is a strong factor in pricing.
And the reason for my change in pricing strategy is the change that has occurred in the market, where many of the REO's and short sales are being priced lower than the Solds. People need to be aware of that, and really need to study the Active competition.
Many people will still not go into the Active comp houses to study the competition objectively. They will still treat their property-for-sale as their "home" and it will be better than everyone else's in their mind.
I'm still opposed to arbitrarily pricing low, just for the sake of getting the prices down to where some people think they should be. Before telling someone to lower their price, all of the other factors should be examined, such as Location, Condition, Competition, Sold Comps, and area Market Statistics. That's what a good Realtor does for the client.
My argument has been against the crystal ball argument that home prices must be at year xxxx level, with current buyers trying to low ball and get those levels today (whatever they are).
I have maintained, and still maintain, that buyers should be prepared to pay today's current market value, or wait until they reach their desired level (if they ever do). Advising sellers to be at the bottom of the current market level is not a change in my position; it is a pricing strategy to prevent chasing the market down. It's the same advice I've always given my clients, and prospects.
I've also said that sellers should sell at current market value, (not the 2005 value) and if they want those prices, then take the home off the market until the market comes back up to their level.
My advice in this thread is to price within 5% of the the sold comps, and that may be lower or higher, but remain at the low end or below the Active competition. I've never stated a position of pricing higher than that.
I also cling to my position that it takes two to make a market; a willing buyer and a willing seller, both under no stress or or pressing need to sell or buy. If those two cannot come to an agreement on price and terms then there is no market and no sale.
When an owner must sell due to an emergency situation, then there is stress and a sale may need to be made in a distressed situation where the seller is forced to sell at a distressed price. Today, unfortunately, we have many distressed sales.
Bill, the difference between me and you 6 months ago was that for whatever reason you did not want to acknowledge what was coming. And that was things were going to get worse before they get better (as I pointed out, things were going to get worse because of the record inventory, extreme out of whack pricing compared to historicals, and a continuing tightening of credit, along w/increased foreclosures dragging down the market).....
you were "stuck" in the present when you needed to price your home for "4-6 months out".
Now again, you're finally giving more aggressive advice and coming over to the "darkside" crowd......
It's nothing to be mad about...I'm just glad you did....
And I'm sure we can agree this time that things will continue to get worse before they get better...historicals in Phoenix are around 06-07 so things are definitely on the right track....
We are also trying to think ahead..as much as we hate to drop our price, on the other end hopefully we can make it up. Anyone know any stats on Sacramento and Placer County in CA? I am hoping, for our sake, that prices keep dropping, hopefully this will sell and looking to buy about 6 months after we sell, hopefully after Christmas this year..That is the game plan, anyway. Want to wait the market out, bump up our credit scores a bit, and just take a break from the responsibility of owning a home for a while...just tired!
I really appreciate all the help and input you all take the time to share..I have certainly learned a lot. At my age I didn't really want to learn this stuff the hard way, but what can I say?
The Sacramento Real Estate blog reports that Sacramento County's price per square foot was $149.84 in April, a 33.9% drop from last year. That translates into a 41% decline in 31 months.
About 2/3 of the houses selling are foreclosures, and all signs are that the banks are pricing them "aggressively" (to say the least) just to get them off the books fast.
With a market in that much turmoil I'd hesitate to jump in and buy something right away. If the market there stabilizes (instead of ending up like inner-city Detroit where you can't give houses away), I'd wager that it will stabilize at a point where prices will be quite affordable.
Whether or not this is the correct way to price a house. If I ever sell again; I will price it a little higher; so I have more wiggle room to negotiate. Now we have little to no room since our price was reduced.
About 2/3 of the houses selling are foreclosures, and all signs are that the banks are pricing them "aggressively" (to say the least) just to get them off the books fast.
With a market in that much turmoil I'd hesitate to jump in and buy something right away. If the market there stabilizes (instead of ending up like inner-city Detroit where you can't give houses away), I'd wager that it will stabilize at a point where prices will be quite affordable.
KC..thank you so much for your help and posting..whew..i was just thinking that when we sell this we might be on the upend there in a few months..I get kind of panicky. We are retired, I could go get a part time job wherever we land, but I have some health problems so that might be dicey. So our earning days are pretty much over and we are on fixed income...it's enough to make a girl lose sleep! If I had my way I would drop it another 30,000 and get it done, maybe even get some mulitple offers at that point. no guarantee but for every month I make a house payment, we are still losing money. thanks again
Bill, the difference between me and you 6 months ago was that for whatever reason you did not want to acknowledge what was coming. And that was things were going to get worse before they get better (as I pointed out, things were going to get worse because of the record inventory, extreme out of whack pricing compared to historicals, and a continuing tightening of credit, along w/increased foreclosures dragging down the market).....
you were "stuck" in the present when you needed to price your home for "4-6 months out".
Now again, you're finally giving more aggressive advice and coming over to the "darkside" crowd......
It's nothing to be mad about...I'm just glad you did....
And I'm sure we can agree this time that things will continue to get worse before they get better...historicals in Phoenix are around 06-07 so things are definitely on the right track....
CJ, I have never predicted. As I've told you before, I don't have the crystal ball. Wallmart has sold out and they aren't ordering anymore. And I don't buy into the "prices have to go to year xxxx" argument.
I look at trends and what's happening in my market and other areas of the country to get an idea of where things are going. So I'm sorry to disappoint you but I'm not part of your "darkside" crowd.
Phoenix has an interesting trend which I've discussed already, and which was mirrored in a WSJ article, but since Walmart sold out of their crystal balls, I'm still not going to forecast.
KC..thank you so much for your help and posting..whew..i was just thinking that when we sell this we might be on the upend there in a few months..I get kind of panicky. We are retired, I could go get a part time job wherever we land, but I have some health problems so that might be dicey. So our earning days are pretty much over and we are on fixed income...it's enough to make a girl lose sleep! If I had my way I would drop it another 30,000 and get it done, maybe even get some mulitple offers at that point. no guarantee but for every month I make a house payment, we are still losing money. thanks again
I've been piddling around looking at the Placer/Folsom/Grass Valley area as well as Shasta area and have noticed prices have dropped quite a bit. There are some pretty decent deals out there and I expect as this year goes on some of the sellers will get more anxious than they currently are and will accept less just to get out from under.
If I could only talk my wife into going back... Maybe a road trip is in order.
I'm seeing prices all over the place in my area of northern New England.
- Houses that have been chasing the market down for ~2 years, started too high, lowered several times a year, but always remaining too far above the curve of current market value (based on condition/location).
- Houses that have been on the market awhile, say 1-2 years, that only rarely lower their price and are now ludicrously overpriced
- New construction at decent to bargain-level prices, but many of these have no garages, no landscaping, no views, and look a bit rough compared to established homes
- Houses new to the market that run the gamut from slightly overpriced to hideously overpriced, as if they're looking at 2 year old comps. In fact, one of them even boldly states in their description, "below 2006 appraisal".
- Very few houses new to the market are priced to sell in the next 1-3 months (IMO). I anticipate that these will either stagnate into the winter or have to take drastic cuts in the fall to stimulate buyers' interest.
Up here we have the double whammy of people not wanting to purchase homes with forced hot air (oil) heating due to the extreme oil prices, and there's a lot of such homes.
Today I spoke with a neighbor who sometimes exercises her real estate license, and she says the market is brutal for sellers and agents here now. As recently as last fall, this market was said be too stable to suffer like its neighbors to the south --- but the prices had already risen beyond the means of the average person. The neighbor tells me sellers are still not quite coming to grips with reality.
If we find a house we absolutely love we'll consider making an offer; otherwise, it could be another year of renting for us and re-thinking a purchase next spring.
I'm seeing prices all over the place in my area of northern New England.
I second that - we are seeing the exact same things and we are also looking in New England. We are having a real hard time finding a house to buy. It is also very difficult to find anything to rent in the areas we are looking.
I would look at the actives because they are your direct competition. Especially look at the vacant ones, and the ones that are close to the age and square footage of your home. You don't need to bother looking at the 290k homes because they aren't your competition, but you do need to look at some others.
Remember the danger of getting behind the curve in the dropping market. Your days on market increase and the home becomes perceived by buyers as having something wrong, or over priced.
At 175 to 180 you are priced higher than the 2100 sf house that sold for 220k. There is a difference in age, but how does it compare otherwise.
If your home doesn't sell at between 175 and 180, but you think it will at 165, then why wait. Price it at 165. Here's why: If it doesn't sell at 175 then you know that is too high, so when you drop it to 165 the market has probably dropped below that. So you are chasing the market down, and will have a very difficult time catching up. You may end up selling at 145 by the time you catch up.
If you're going to be buying another house, then that house is probably also dropping in value, so you will probably break even with them both declining in value.
My suggestion is to go look at those similar comps, and price it where you know it will sell today. If you price it too low, then you may get multiple offers.
Well ... a funny thing happened this week. We already have somebody interested in buying the house. We hired some yard and pool workers to clean up the outside of the property before we move out. Turns out the pool guy is also a contractor that does rental properties and, his wife is a realtor. They want to move out of their current house, convert it to a rental ... and buy a house with a pool that has lots of privacy. Apparently our property fits their needs.
He asked how much we wanted for it. We said we would reduce the price if we didn't have to pay for the realtor and other renovations so, we're negotiating with them now. If all goes well ... I won't even have to put this property on the market and I won't have to bother with fixing it up that much.
So the bottom line does seem to be price. Seems like it's cheap enough ... people will buy. We intentionally moved out to a cheap area during the boom so we wouldn't have to pay too much. Prices doubled within two years after we bought this house but, we never borrowed on it ... and I'm so glad we didn't.
My husband is a veteran and, while we qualify for other financing options, we would like to use our VA loan on this house for the next purchase so ... if we can move this property quickly then, that we will work great for us.
Last edited by sheri257; 05-11-2008 at 06:10 AM..
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what can I say?
