Home Will Sell if the Price is Right
To sell home, make sure the pricing is right
By Lew Sichelman
United Feature Syndicate
June 15, 2008
WASHINGTON — You can spruce up the outside of your house to the point where it stops passersby in their tracks. You can “stage” the inside so it looks roomy and brand-spanking new. You can give away a car or vacation to your eventual buyer. You can even offer a cash bonus to the selling agent.
But in today’s market, if your place isn’t priced correctly, it probably isn’t going to sell. More than likely, it will languish on the list of unsold inventory until the market adjusts back up to your asking price. And that could be months — or even years in some places.
A far better plan is to adjust your price to local market conditions, and let the market come to you.
“I have learned that a great strategy for sellers who are serious about getting their homes sold is to price the property ahead of the market,” said Michael Selvaggio, president of the Council of Residential Specialists and a broker in Townsend, Del.
In a seller’s market, Selvaggio said, there’s nothing wrong with setting your price a little higher than the last one because prices are steadily rising. But in a flat or declining market, your price should be a little lower than the last comparable sale.
And not just a few percentage points lower, either.
“When was the last time you rushed out to the mall to take advantage of a 2% sale?” asked the 32-year real estate veteran. “You need to have a real sale, so how about 5% to 10% off, for starters?”
Price adjustments
Owners instinctively know, perhaps with a little prodding from their agents, that they’ll have to adjust their price if their homes are not in great condition. Ditto for houses that are not in the greatest locations. But many sellers today are reluctant to trim their asking numbers in a “challenging” market, clinging unflinchingly to the notion that their homes are worth what they paid for them — and then some.
Sellers who have the best results realize the logic and marketing advantage behind placing a realistic price on their homes, Selvaggio said. “Make no mistake about it — price sells.”
If some sellers haven’t yet gotten this message, some real estate agents haven’t either. There are plenty of agents who continue to accept overpriced listings on the theory that if you throw enough mud against the wall, some should stick.
But according to Robert Jenson of the Jenson Group, a luxury Las Vegas real estate agency, an overpriced house will wither on the listing vine, putting it at a strategic disadvantage to other, newer listings.
Ultimately, Jenson said, the owner of an overpriced property is often forced to accept less than what he might have sold it for had he been more realistic in the first place.
Market controls
Howard Brinton, a sales trainer from Boulder, Colo., said too many agents let the market control them, instead of the other way around. An agent, he says, needs to be a counselor and educator as well as a salesperson.
“Pricing, specifically correct pricing, is the only answer for today’s changing market and the most important thing a Realtor can do for his client,” Brinton said.
To price your home properly and achieve a prompt sale, you need to anticipate the market and get in front of it. “You never want to get caught chasing the market down,” the realty educator said. “You want to get ahead of it.”
To price their homes properly, sellers need to know how fast properties in their specific market segment are being sold. You also need to know how much competition you have for today’s skittish buyers, most of whom are worried about jumping into the ocean while the tide is still going out.
And you need to know market statistics such as absorption rates (the number of homes sold in any given time frame), inventory (the number of unsold houses) and days on the market (how quickly or slowly houses are selling).
Of course, it is difficult, if not impossible, for sellers to perform this kind of research on their own. And if your agent can’t do it for you, find one who can.
Above all, heed Brinton’s final bit of advice: Selling houses is like standing in line at the grocery store. Eventually, you are going to get to the cashier. But if someone breaks in line with a more competitively priced property, you are going to have to wait longer.
Lew Sichelman can be reached at lsichelman@aol.com.
June 16 2008 01:46 pm | La Times and Local LA Real Estate News