Traditional home sellers are cautiously entering the market again. They have heard the recent news that home sales have rebounded in the Twin Cities area. True, the number of homes sold is up this is a good thing. Homes are selling again in Minnesota.
I have noticed an uptick on the number of requests for market analyses in the past few weeks. Many sellers are realistic about the housing market and realize that they will not get the price they could have sold for a few years ago. They have witnessed what neighboring foreclosed and short sale properties have sold for. They have received their tax assessed valuation in the mail and know it is 20-40% less than a few years ago. But still some would-be spring home sellers are looking at the recent news reports through rose-colored glasses, forgetting that the average price of a home is still down considerably.
The internet has changed things. Homebuyers have an abundance of information at their fingertips these days. With a click or two of a mouse, they can discover when a home was last sold, what price it sold for, what the current assessed value is and more. They know what other homes in the neighborhood sold for too. There are websites that will analyze the cost per square foot of all homes currently active on the market in a particular area—Today it doesn’t take a rocket scientist to tell if your home is over priced. Buyers just won’t consider it at all!
It is always a tough conversation to have with a seller. They made an investment by when they purchased their home. They worked hard and spend additional money to fix up their property inside and out. And now it is often worth less than the initial investment that they made. To sell for less than what they paid for the home leads some to think, I'm giving my home away.
But are they really? No buyer wants to overpay for a home. No professional appraiser will overvalue a home. No bank will give a loan to a borrower for more than a home appraises for today. Sadly, traditional sellers that have to sell at these lower values are not giving away their homes; they are starting over and moving on.
One of the testimonials I recently received for a townhome sold in this market gives an optimistic way to view the market. "We couldn’t have asked for a better person to work with. We were very pleased with the attention and effort you put into selling our townhome. The fact that we were able to sell our home in the worst market decades speaks volumes about the way it was marketed." Here is a family that lost tens of thousand dollars on the sale, but was elated with my work as they had to relocate. They priced their house correctly, even though it meant that they would lose money and it sold.
The truth is homes are selling again, but at much lower prices. A home is only worth what someone wants to pay for it today. Unfortunately, homeowners must choose whether to take a loss now and move on or stay put until values increase. And even a cloudy crystal ball indicates that could be a long wait indeed.
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