Get Real With Your House Price
By AMY HOAK
June 8, 2008
Sluggish housing markets are filled with listings that are lingering on the market, prompting many home sellers to ponder a price cut.
A seller's reality check may come after the listing produces very few showings or a prospective buyer is lost to a competing -- and lower-priced -- home down the block.
"It's a very price-driven market," says Mike Golden, co-founder and co-principal of @properties, a Chicago-based real-estate brokerage.
No longer are buyers letting their emotions interfere when they decide to buy a home -- they're looking for deals, he says.
Many sellers whose homes are sitting on the market without a buyer in sight had unrealistic expectations from the start, real-estate agents say.
"We still have sellers who are in denial of the market and don't want to price properties where they need to," says Susan Jacobs, broker-owner of an Assist-2-Sell brokerage in Manassas, Va. Her clients are often shocked to learn how much prices have fallen.
How can sellers tell if their homes are overpriced? Look for the following signs:
1. Not enough showings. A home is likely overpriced if it doesn't get any showings in the first couple of weeks it's on the market, Ms. Jacobs says.
Even more proof a price cut is needed: people are interested enough to take information from brochure boxes in front of the home, and there have been a substantial number of hits on its Web site listings, but buyers still aren't scheduling showings, she adds.
A real-estate agent will often have access to data on how many hits an Internet listing gets. If a home doesn't make a buyer's "showing cut," and buyers don't think it's worth the time, hassle or gasoline to schedule a visit, it's likely overpriced, says Dave Crumby, broker-owner of another Assist-2-Sell brokerage, in Tempe, Ariz.
"If you can't get people into your home, it's highly unlikely that it will sell," he says.
2. Some showings, but no contract. Perhaps the number of showings isn't a problem, yet there still have been no offers.
"If you're getting showings but not getting a contract, that means you're still not quite low enough," Ms. Jacobs says. "You're close, but there's so much competition out there."
Consider this guideline from Becky Flores, a real-estate agent at a San Antonio-based Keller Williams brokerage: "Ten showings and no offer or two weeks with no showings, you are probably overpriced for the current market. This is true especially in this very competitive market," she says.
3. Similar homes are now selling for less. In markets where the median price is falling, it's important to regularly monitor what homes are selling for, Mr. Golden says. Real-estate agents should provide clients with up-to-date information on the market to determine whether the home is still priced correctly.
"Historical data isn't quite so powerful anymore. You have to look at what is selling now, and what it is selling for," Mr. Golden adds.
In Phoenix, there's a big difference between the average price for active listings and the average price for pending sales, Mr. Crumby says.
Monitor pending sales daily, and make sure your home is competing well with the homes that buyers are taking action on, he adds.
4. Repeated negative feedback. If buyers who do walk through the home have the same negative reactions to it, that could be another red flag that the price needs to be dropped, Ms. Jacobs says.
Buyer feedback, collected from a real-estate agent, may reveal that other houses in the price range have updated kitchens or bathrooms and the home in question hasn't kept up with the times.
