Sandra :)   Do you want the answer? because these days it is a buyer's market, many factors :) we can make a book about those,   Great blog :)

Sandra:

Price has always been the key ingredient in the magic formula.  I don't know of anyone who wants to pay more rather than less.

The additional time in marketing is called a market correction, and we have been way over due for the fallout.

Sandra, well said.  Now how to convince the seller's.

Sandra, excellent. More Sellers need to read this and realize that price and condition are what sell a house. If they aren't really motivated they need to take the house off the market and let those that are sell their houses. Another key item here are people who used their homes as ATM machines and still want to sell...no equity...no sell!

You are featured in Everything California

Everything in Real Estate still comes down to a very simple concept learned in Economics 101:

The law of supply and demand.....

Each and Every house (YES, EVERY ONE) will sell when the demand for such homes and list price of a given home reach equilibrium..

They just might sell for several thousand dollars less than the seller paid for them 2 years ago.....

Sandra~ It's the same here in Lincoln, CA too. We had soo many speculators in this area, and of course we relocated at the peak of the market from the Bay Area...yikes! 

Sandra- great insight and good job communicating it!

You are right.  Sellers do think that they have the best house and that there isn't another like.  They have better upgrades, etc...  They still think they should get what their neighbors got last year.  The truth is they are loosing money each month their house stays on the market.  They are loosing 1-3k a month in most places here in California.  I have heard of a couple getting more then market price resently, but the truly did have a one of a kind.  This is not the norm.  If the house is overpriced, it, most likely, won't sell, and the longer it doesn't sell, it effects the pocket book.  Thank you for your blog.  Earl "The Pearl"

Gena, thanks for the Every Thing California Star! It is getting harder every day for sellers in our area to deal with what homes are selling for. Someone at my office was talking about how indignant one of her sellers was---along the lines of "I'm not going to give my home away"---and she actually told him, Look you paid xxx amount of dollars for your home a year and a half ago, you took out over $150,000 after less than a year-----You have already made $150,000 on this house!

Its pretty simple in my eyes.  Boils down to 3 things.  Supply, demand, and perception.  Supply and demand are the simple economic factors but consumer confidence is definitely low also!

Supply, demand and looking for the bargain! On both sides.

Seller wants more $$$, buyer wants to save more $$$. Tug of war = houses on market longer.

Days on Market seems to help when trying to do a short sale, but in a regular sale it hurts the seller and helps the buyer - usually.

Where the heck is the UPSWING? So we can all celebrate again.  This time we promise to be smarter - just give us another chance!

The home price market is on the decline.  Experienced agents keep a close eye on comps to be sure that their own listings are priced low enough to attract potential buyers.  Many inexperienced agents are accustomed to pricing their clients real estate for just about anything under the sun and waiting for the appreciating market to catch up and sell the listing for them.  Well times have changed and many sellers will need detailed statistics and trust in their agent to keep the price reductions coming until the home is sold.

The sub-prime industry caused the largest ripple downward.  However, people still need to move and the cream will rise to the top in the Realtor world. 

I like Evans comment but I think subprimes caused the largest increase in prices.As soon as the home prices get back to 2004 inventory will decrease. My guess is 2009

suprimes = its the lenders fault!    no lenders, no loans.

I hope it gets better before 2008!

Perhaps the homes that are not professionally staged are staying on the market longer...it's a changing market that calls for changes in marketing plans. :)

Susan

Susan,

I agree. Just had a home staged and came back and things were back out because, as the man said,
"I live here, and I want things to be my taste!" Could have thumped him!! With his attitude, short sight, he might as well have his taste, he won't be selling anytime soon! Too many other choices.

How you live in a house is soooooo different than how you present it for sale!  And I know first hand...I've moved (w/kids and dogs) 3 times in the last 10 years.  So yes, it is an imposition, but you have to make the best of it.  My kids got a kick out of pre-packing, and they still talk about our "car parties" during showings.  It's all in how you look at it...much like life!  Also, women are typically more open to staging then men...yes, I'm stereotyping...but men don't like change as much.  For them, you have to convince them that they'll get more money and faster!

Have a great day everyone!

Susan

and why does no one mention that the media plays a big part in this market - sometimes even price doesn't sell - it's perception.  We had a 12 year run, everyone got over excited and now it's cooling off....let's see the stock market plummeted in 2001 to 2001 and not it's at record highs.....this too will change.  Mantge your own perceptions and don't believe the bs that the media pushs......

Sandra,

You are right about the price. Unfortunately many sellers are still living in the world of two-three years ago. And they are very slow in coming to the realization that the market has shifted dramatically. A house, or anything else for that matter, will sell if it is priced correctly. The market is always there, you just have to be realistic.

All of these comments really hit the nail on the head. It just seems so difficult to communicate this information to the sellers today.  Each seller seems to think that the market doesn't apply to them and that if the agent does what they recommend their home will sell..then they blame the agent for everthing.

I feel right now sellers are starting to get it. Some of them way to late for them to sell anywhere close to their desired price. Good comments. I am hopeful the market will turn around next year.

I came back to this one to see the comments.  Hopefully Daniel is correct and that market turn around by next year.  Actually  I am hoping for sooner.

Daniel - I'm hoping for next year too but I think it may take a little longer. All of the subprime lenders going under is going to affect the entire market for a while, I'm afraid.

Rosemary - Wish I could feel confident about the turn around. Out in our area, if there were no "stated income loans" - the ones that don't have to have a pay stub, etc. to confire what you make - we wouldn't have many buyers. These days, especially out here, no one wants what they can really afford!

It's about price and condition.  Then on the other side of the coin it's about the lender the buyers are using.  Does that lender know what he's doing?  Is he setting that file up just right for that underwriter?  You don't get second chances nowadays.  Securing financing is something that is going to be a much tougher job from here on out.  

I have encouraged my non-serious sellers to take their homes off the market if they are not going to get down to business with pricing. 

It is always interesting how people perceive things.  I recently had an inquiry from an agent representing a prospective buyer about a listing I have for a property listed at $539,900.  The agent told me over the phone that his buyer was thinking of making an offer for (and I don't remember the exact amount now, but for the sake of an example let's say) $325,000.  It was so far off that what I heard (again here's a perception issue of my own) was $525,000.  The agent went on to say that he didn't think it was worth putting an offer together.  Since I had heard $525,000 I told him to go ahead and lets see what happens.  After talking some more he mentioned the $325,000 price a couple more times, and I finally heard it correctly!  I said "Did you say ‘$325,000?'"  When he assured me he had, I then agreed with him that it probably wasn't worth the trouble of putting together an offer.  (Too much late night TV on the part of the prospective buyer!)

In further discussion it was disclosed that his buyer was in the process of selling a condominium in a nearby neighborhood.  The agent told me the condo was listed for something like $350,000.  I saw a grand opportunity, so I asked the agent if he thought his client might be willing to accept $50,000 for the condo.  We both laughed and the agent said no.

So the prospective buyer for my listing somehow perceived that he had some sort of a chance to make a purchase at a ridiculously low price, but perceived the value of what he was trying to sell at a reasonable and probably slightly inflated price.  Odd, but I guess most of us are the same way, maybe not in regard to real estate (because, hopefully, we have a realistic view of it), but in at least some areas.

John, Isn't it amazing how people think! They hear prices are moving down and they expect for other people to give away the farm. I think your example is superb. I've seen a lot of that down here in Riverside County. We have many, many short sales and foreclosures in our area, but there is no way the banks are taking those kind of prices either!

I have refused listings recently where the seller offered me the job but would not list at the price I recommended.  I told them I was not the person for them if they are not serious about doing what it takes to sell in this market.  

About half of these people said OK and I took the listing.  Those sold within a month.  I tracked the others and they are still on the market. 

I agree this is a buyers market, but I think we have created a monster.  In 04/05 it was the seller asking for huge amounts of money, now it's the buyers that think they can get something for nothing......And they think by waiting, it's actually going to happen! 

Great insight, I totally agree with that you said.  Some sellers are just stubborn though and if they can afford to hold on I guess they will.

Sandra,

I think we got another 3 years like this ahead of us too. Great post.

Mike Lewis

Fortune magazine has a good article on the real estate market that explains how the price-to-rent ratio needs to normalize (rents need to increase and prices need to decrease) before sales pick up again.

http://money.cnn.com/2007/11/06/real_estate/home_prices.fortune/index.htm?postversion=2007110711

The problem with applying the law of supply and demand to home sales is that the demand is for housing, not home ownership.  Home ownership is more valuable than renting, but right now the premium is very high.

You are absolutely correct about pricing low enough initially.  We have learned at our office to take every offer, especially the first one, that comes in very seriously because it may be a while before another one, and by then we will probably have reduced the price further.  Very true Post!!!

What if the seller could offer the buyer something that no other sellers in the area are offering, something that would make his listing stand out from the rest?

If all other things being similar (price, condition, location) what if the seller offered to give the buyer a financial software system that has been tested and working for thousands of homeowners across the country, that will coach that buyer on how to pay off his new 30 year home loan, that he negotiates with his own lender, in half the time or less (10-15 years in most cases) and paying no more than his 30 year payment that was set by his lender. Do you think you might have an advantage over the competition? I'm personally working with several agents that have had success with this concept.

Anyone interested in offering this to their clients to use as an incentive to sell their home faster contact me for complete details. There is no cost to you as the agent and I will handle all the necessary paperwork with your client, and the buyer to close the deal. It's a win win win for everyone. 

Supply and  demand the fact the lenders are not doing no doc loans and 100%. And your buyers have to have a real down payment...

Great post! It's tough trying to convince some people that their homes just won't sell for what their neighbors home sold for even a year ago. I'm at the point now where I just won't take anymore overpriced listings. Some sellers just have to learn the hard way. If they just priced their homes right to begin with, their homes would sell quicker. Instead they end up getting desperate to sell, and end up selling at a much lower price than they would have received if they just allowed me to price their home right to begin with.

Even when I go in to a listing presentation with printed articles & comps/statistics on the market today, some people are just too much in a state of denial, which is unfortunate. Very frustrating.

buyers only care about one thing now. price

Its all about education, educate, educate.  Then use patience.  Sellers are hard nose or they can be.

The #1 Reason homes are on the market longer is the lack of Down Payment Funds available that buyers have!

Simply put, the mortgage crisis has almost eliminated all 100% loan programs and the new banking guidelines have become so tight that 40% of all potential home buyers have been elimimated. We actually have a new name for theses folks it's called renters.

There is a solution! If you are interested in what it is click on a link below:

For Buyers

For Sellers

For Realtors and Lo's to grow their business.

Hope this helps :)

Marlo

If it makes any of you feel better, Corona del Mar, Dana Point, Coastal Huntington Beach, Laguna Beach, Newport Beach, Newport Coast & San Juan Capistrano all have had increases in the median price since 2006.  Many other areas in Orange County as well. It's true that sales volume is down in all of these areas except Corona del Mar and Dana Point but things are definitely changing for the better.  My area is usually the last to feel the pain and the first to recover.  Also, properties $3 million and up into the mega millions ($30) are moving.  If cycles repeat themselves, for us in Orange County and surrounding areas, we could possibly be at the bottom right now.  Temecula is probably only a year away.  Buyers are beginning to lose their opportunities.

 I have my buyers email me the articles they are reading.  Most of the time they don't realize that the "reporter" is using statistics from Michigan or somewhere else that least affects us.  It makes for good conversation and it's getting my buyers off the fence. 

Mutiple offers are even back on properly priced properties. 

I have also been taking the last 3 months worth of sales with me and I post it on my Open House Board.  People are surprised to see so many sales.  It works equally well with expireds who blame the market instead of their agent.  "It's not the market, it was your alignment within the market that cause your home not to sell."  It's all the truth. 

All good comments. As an investor in this market - the #1 thing to me in this market is pricing the property right out the gate.

If I am not priced right to sell within 30 days I will chase values downward and sit there longer. There is a lot of competition out there and more to come and knowing this I have to look at what other similar properties are listed for as well as the condition of these other listings and price myself accordingly to be the next 'best' sale/value in order to attract buyers.

these are all great comments

Even if the sellers are realistic about the prices and buyers are willing to make the offer, I heard deals fall through because loan is not available.  I wonder how the increase in mortgage/loan limit will change the scenario in the California real estate market.  People can now borrow more money at a higher(?) rate when loan is not available?

For more information on the loan limit increase:

http://www.fhaloanpros.com/2008/02/huge-increase-in-fha-loan-limit-passes-congress/

http://www.mortgagebankers.org/NewsandMedia/IndustryNews/60648.htm

Even if the sellers are realistic about the prices and buyers are willing to make the offer, I heard deals fall through because loan is not available.  I wonder how the increase in mortgage/loan limit will change the scenario in the California real estate market.  People can now borrow more money at a higher(?) rate when loan is not available?

For more information on the loan limit increase:

http://www.fhaloanpros.com/2008/02/huge-increase-in-fha-loan-limit-passes-congress/

http://www.mortgagebankers.org/NewsandMedia/IndustryNews/60648.htm

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