Monday, October 30, 2006

Market Moves Forward with Motivated Buyers, Sellers

I just returned from a conference of top agents from the Washington, D.C., metropolitan area, and while they are working harder this year than last year to turn a deal, they are moving forward with their businesses by working with motivated sellers and buyers.

"The market is the market," one told me. "You have to sell and buy real estate in this market, not last year's market, and not the market you wish it would be."

One thing all top producers had in common was that they "get it" about what kind of market in which they find themselves, which is more than what they could say about most of the buyers and sellers who are trying to move from one property to another. Here are a few of the excuses seller's are using to justify the price of their houses.

What sellers say: "I need X-number of dollars from the sale of my house."

The truth is: With all due respect, it doesn't matter how much you "need." The market determines the sales price of a house. I just saw a home that has now been on the market for 328 days in Loudoun County, Virginia -- the sales price has dropped $150,000. That seller understands it doesn't matter how much he "needs," however, he would probably have sold it earlier if he would have dropped the price quicker.

What sellers say: "I have a bigger lot."

The truth is: You can't live on the lot. While the size of your lot will make the property more desirable (for some buyers), it doesn't necessarily mean it adds more value in a buyers market. Price according to other houses like yours, not other lots. This is particularly true in a subdivision where the lots are mostly created exactly alike.

What sellers say: "There's one special buyer out there … ."

The truth is: While this may be true in some instances, for most properties, there are several buyers -- if you have the house in the right condition and price. Overpricing a property and waiting for a stupid buyer is a waste of everyone's time.

What sellers say: "Advertise more."

The truth is: A property priced right is the best advertising you can use. The best property with the worst price still won't sell. The best property will at least bring about some offers, but not necessarily the asking price.

What sellers say: "If I don't get X-number dollars, then I just won't sell."

The truth is: Most sellers using this line mean they have their house overpriced and will die in it rather than drop the asking price.

There are three determining factors of the salability of a house: location, price, condition.
In areas where commuting is a daily battle, location definitely makes the property more desirable than a house miles and miles away. Location may also mean the location in the desirable community. The former model home facing the four-lane highway may be in great condition and be in the right community, but the location on a busy road could adversely affect the salability of the house.

Price is what most homeowners are battling in today's market. If a house looks great and is over priced it will not sell. Even some "fixer uppers" I've seen these days are overpriced. They may be asking for less than other homes in the community (which are also overpriced), but they're still not moving because there's a great looking house in the neighboring community that sold for the fixer upper price a week earlier.

When a house has more amenities than the competition, this doesn't automatically mean it's worth $50,000 more. In today's market, it may mean it's just going to sell faster.

Finally, the condition of a property is vital to the salability factor. Many of these top producers are challenging sellers to drive around with them to compare the seller's house with those that are already on the market. Those that tour other houses, usually end up pricing the house appropriately, to make their house a "good deal" against all the other comparable homes in the area.

Remember, if someone can remodel a kitchen for $30,000 -- then why would they pay $50,000 more because you have one that was remodeled last year. Sellers and buyers who understand the market are cashing in and getting good deals. Sellers need to focus more on equity gain over the last several years, while buyers need to get off the fence and get a good deal.

Published: September 15, 2006

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