PRICING and our Crystal Balls!

By
Real Estate Agent with RE/MAX Suburban

I have been seeing a lot of articles regarding price reductions lately, but 1 I read recently stood out....it wasn't geared towards the listing agents but rather, the sellers. What a great thought! I am going to include something like this in my pre-listing packets (I will work on that in a future blog). We all know how very difficult it is to bring up the conversation of reduction's when dealing with our sellers---especially when we priced the home, we priced it to sell, and we missed that 'magic number'! When sitting with sellers discussing pricing, potential reductions, and market reaction, I verbally go thru how we 'read' the market after the home is listed. Actually, this post started out on what I was going to include in writing, regarding a price reduction seller questionnaire in my listing presentation, but I will post that in the future--this seemed more important at the moment......or I just went off on another tangent. In my experience--in this declining market, we know where we are sitting in the 1st 3 weeks of market time----buyers, buyers brokers, and activity, DO NOT LIE---but rather, tell a very important story. I then discuss in more detail what could happen, what should happen, and that I do not have a crystal ball---but... more often than not, I can usually predict the outcome (keep in mind, this is only the case when the sellers have listened to pricing strategy and getting their home market ready). When the listing is fresh and new, we should get the most activity w/in the 1st week or 2 ---if there is a lack of showings, or no showings(OMG), the entire market has just rejected us. They could have gold walls, and platinum floors and it DOES NOT MATTER---we have priced ourselves right out of the market---buyers and buyers brokers do not even want to bother coming in to view. On the other hand, if we get a good amount of activity and/or an above average amount of showings, with no 2nd showings, or offers, they are basically rejecting the home personally---the MILLION DOLLAR QUESTION is why? The answer is Value in Comparison to Price---PERIOD. The specifics, unless it is something we can change, really do not matter. Is it location(busy intersection, airplane noise, commercial nearby etc), we cannot change that-ONLY PRICE. Is it condition(outdated kit and baths, home is dirty, basement floods etc), some of that we can change, but, are the sellers willing to change it, if not, PRICE AGAIN. Once we can pinpoint the 'Value to Pricing' magic number, the home will sell--its pretty simple. The only thing we need to remember is......and keep in the forefront of ours, and our sellers mind's, in a declining market with loads of competition and months of inventory, TIME IS OF THE ESSENCE--do not wait to make these imperatively important price changes---it will cost them much more in the end.

Heidi Engel
BROKER/Realtor
ADPR, FSSR, SRES RE/MAX Suburban
www.HeidiEngel.com
ofc 847-385-3327
cell 847-910-2001
fax 847-749-3708
Listing + Selling NW Suburban Homes for over 20 Years!

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Comments (9)

Gita Bantwal
RE/MAX Centre Realtors - Warwick, PA
REALTOR,ABR,CRS,SRES,GRI - Bucks County & Philadel

There is a good window of opprtunty until April 30th and sellers should reduce the price if necessary.

Apr 01, 2010 02:27 AM
Bridget Cella
Re/Max Connection - Sewell, NJ
e-Pro, Realtor

I guess that's where you as an agent decide to take the listing or not.  If they want it over priced then maybe they should try another agent?  Unfortunately I have lost listings because I gave them the price I wanted to list it at, they listed higher but then after a long period of time ended up selling where I told them to list!

Apr 01, 2010 02:28 AM
Heidi Engel
RE/MAX Suburban - Mount Prospect, IL
BROKER/Realtor, ADPR, SRES, FSSR

Gita, I agree wholly---we have 30 days to get current listings under contract---after the credit expires, there are many unknowns?????

Bridget, I actually walk away from more listings then I take---we know when we are sitting at that table whether or not we will be able to sell it---the motivation and how realistic the sellers are depends on whether or not I even want the listing---1 thing I force myself to remember to mention to the sellers is that no hard feelings and if they are not successful, please do not hesiate to call me back in the future.

Apr 01, 2010 03:07 AM
Bruce Walter
Keller Williams Realty Lafayette/West Lafayette, Indiana - West Lafayette, IN

Heidi, it is important for us to relate to the sellers that we don't price the home the market does.  I enjoyed your points about price and conditon/value.  The sad thing for many of the stubborn sellers is when they finally reduce the price they are chasing the market down and are still behind their competiton.  The opportunity costs are lost time, no sale, and missing a chance to buy a house on the other end at a lower price before they go back up.

The activity is unbelievable where we are -homes are going very fast with multiple offers(the ones priced right and that offer the value at that price!).

Apr 02, 2010 01:29 PM
Heidi Engel
RE/MAX Suburban - Mount Prospect, IL
BROKER/Realtor, ADPR, SRES, FSSR

Bruce---great points!-----and even BETTER to hear that you market activity is great---it's such good news to hear markets are moving----hopefully that will continue after the tax credit is "off the table". I often use the exact term--chasing the marklet down----I explain we need to jump in front of it to 'steal' that next buyer b/4 our competition does.

Apr 02, 2010 01:36 PM
Bruce Walter
Keller Williams Realty Lafayette/West Lafayette, Indiana - West Lafayette, IN

Heidi, I also noticed that a lot of our pending transactions are LOTS(vacant land) and that is a great sign of things to come.

I too wonder what will happen after April 30th, but much of the research indicates that most of the first time homebuyers do not consider that tax credit important.  Investors are really driving the market with the REO's so that will continue for sure after the tax credit expires.

 

Apr 02, 2010 01:44 PM
Heidi Engel
RE/MAX Suburban - Mount Prospect, IL
BROKER/Realtor, ADPR, SRES, FSSR

Bruce, WOW, lots and vacant land selling is surely a good sign of things to come! I do not see that here yet---but one is always hopeful ;) Your area builders seem to be getting back into the market--1st steps, but steps in the right direction! Are you seeing a lot of 1st time home buyers buying also?

Apr 02, 2010 10:57 PM
Bruce Walter
Keller Williams Realty Lafayette/West Lafayette, Indiana - West Lafayette, IN

Heidi, I left you a follow up comment on your "Good News...Bad News" Blog about the building situation in Lafayette and how overbuilding led to our declining values in lower priced homes after 2006.  So I hope things do NOT go down that path again.  The custom builders have held their own but the tract builders have suffered.  I am working with a small builder finding REOs at a great price with minimal work and he is doing that to stay viable during these tough times.  You have to adapt!

There is a lot of activity with first time home buyers, but investors are snapping up those foreclosures at a very rapid pace.  I think it is a good thing in our area because these rundown properties are being fixed up and rented out to families who no longer qualify to buy a home, or they are flipped.  This is good for the neighborhoods.

Have a great Easter weekend, Heidi!

Apr 03, 2010 03:12 AM
Heidi Engel
RE/MAX Suburban - Mount Prospect, IL
BROKER/Realtor, ADPR, SRES, FSSR

Happy Easter to you and your family Bruce!

Apr 03, 2010 11:03 PM