I talk to a lot of people who have ‘tried' to sell their homes either on their own as a FSBO, or, with one or more agents and have stopped. I'll talk more later about what you need to do to sell, but for now I'd like to talk about the decision to sell. I will be talking about my town here but much of this applies wherever you are. I would like to take a moment of your time to discuss the current market and the challenge you face in marketing your home in Lexington.
First, I can think of only two reasons that you may not be marketing your home. The first is that your personal circumstances have changed and you are planning to stay in the home for some time. If this is the case then I wish you many years of enjoyment here in Lexington. The other reason is that you feel that the ‘market timing' is not good and that a little more time will change the financial picture. If this is the case then please read on.
For anyone who has done any investing in the stock market, it is a basic truth that no one makes money by timing the market. Additionally no one makes money by being emotionally attached to a stock. The only definition of a ‘good' stock is one that is increasing in value. When it stops increasing in value it becomes a ‘bad' stock and should be sold. For most of us our home is not a true investment, we bought it because we liked it, we are emotionally attached to it, we live in it as long as it suits our needs, and when we decide to move we sell it in order to purchase our next home. We don't sell it because the market is going up, or down, or sideways. After having made the first decision that it is time to move too many people lose their way when the discussion turns to money, and what the market says your 'investment' is worth.
The current market has changed things in Lexington. Buyers have become more selective looking for homes in move-in condition, and in many case specifically new homes The homes that are commanding $1,000,000+ prices in Lexington are either brand new construction 4,000 + sq ft colonials, or the carefully restored Victorians. At the low end, homes in the $300,000-$500,000 range are being purchased and torn down to be replaced by new ones. Construction cost for a new 3,000 sq ft home is roughly $400,000. The net result is that buyers can have a brand new home for $800-900,000. The result of these activities is that the mid range $600,000 - $900,000 home prices have remained flat to down as buyers have focused on either end.
I have attached here a link to two reports, a long term 2nd Qtr report, and a short term July monthly report.
http://www.mikesrealsolutions.com/Lexington-n11172.html
From the long term report you will see that the market in Lexington is down slightly from a price peak in 2005 and a volume peak in 2004. All indications are that 2008 will be in line with 2007 for volume and pricing. It is also worthy of note that the summer months are peaks for both volume and price. With the current state of the economy no one is predicting a return to rapid price growth for several years, but the seasonal strength is a reality. Holding onto a house is not the same as holding a stock certificate, the house incurs maintenance issues and as time passes depreciates as styles and tastes change. Time is not always your friend. The land value, and taxes will go up but the building may not, so waiting for the market to go up can be a losing game.
From the short term report you can also see that the summer pricing is looking stronger, but the volume is an issue this summer. Sellers such as you have been holding properties off the market and currently we are at a low level of only 117 properties listed for sale in Lexington. Of these only 15 are in the $700,000-$900,000 price range.
This is a key difference between houses and stocks. For most stocks there is essentially an infinite supply, you can always buy GE and you can always sell GE. For a $700,000 home in Lexington there are only 10 on the market, so if a buyer wants a home in that price range then there are only 10 to choose from. The result is that this summer is a great opportunity for you to take advantage of high seasonal demand paired with significantly limited supply (read ... competition). Pricing your property realistically for the current market, you will be able to sell quickly, use the money to fund a new dream, and move on with your life.
Don't spend years of your life waiting for the right time to act, act now and live your life.
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