What you should be telling your sellers to get a price reduction

By
Education & Training with tech4REpros

As I posted in "Time to Motivate your Sellers" in my local blog, the peak season for real estate is winding down.  Sellers who are tempted to "wait until next year" need to be reminded about the effect of interest rate increases and REO inventory on prices. 

Concern about inflation makes it likely that interest rates will be higher next spring.  The rising number of foreclosures and NODs makes it likely that there will be more bank owned properties on the market next spring.  Sellers who want top dollar need to price their listing agressively to generate offers now rather than waiting until next spring when higher interest rates and more REOs will likely drive prices down even further. 

In my local market, "wait until next year" is a bad plan, unless you are willing to wait 3-5 years.  What about your market?  Is your local paper reporting increases in foreclosures and NODs?  You can't fight facts, so you might as well make them work for you.  Have a heart to heart with your sellers about why waiting for market prices to go higher doesn't make sense.  Signs point to even lower prices in 2009 in most areas.

Does that mean buyers should wait until next year?  Not necessarily.  Interest rates determine the amount of their monthly mortgage payment, so even if buyers can purchase the same home for less money next spring, they might still end up with a higher monthly payment.

Thanks for reading!

Frank Jewett

Comments (14)

Jason Romrell
Business Attorney and Success Advisor - Los Angeles, CA

Good info.  Good real estate professionals will consider this type of info as they help their buyers and sellers.  Nice.

Aug 24, 2008 09:15 AM
Kacem Benali Bethesda & Rockville REALTOR
Rockville & Bethesda Homes for Sale, I can help sell ur home - Rockville, MD

Great post, its the same story in Mountgomery County, MD where I work.

Rockville homes for sale. Rockville Realtor Kacem Benali

Aug 24, 2008 09:15 AM
Frank Jewett
tech4REpros - San Jose, CA

Kacem, thanks for the update from Montgomery County, MD.  Interest rates should be the same all over, but foreclosure activity can vary from neighborhood to neighborhood, though many of the folks who said "that can't happen here" have already been proven wrong.  My philosophy is that you can't control the market, so you need to learn how to sell the market you're in.  If you take that approach, you can make the media work for you because their articles will play right into your pitch.

Aug 24, 2008 09:27 AM
Konnie Mac McCarthy
MacNificent Properties, LLC - Cobb Island, MD
Broker/Owner - VA & MD "Time To Get A Move On!"

That's for sure it's going to take a couple of years to dig out of this one...so next year isn't really an option....

Aug 24, 2008 09:32 AM
Travis Newton
Salem and Bend Oregon FHA, VA & USDA 503.931.4490 - Salem, OR
FHA, USDA, VA, LOAN EXPERT - Salem OR Homes For Heroes SALEM OREGON

Don't do a price reduction...do a permanent rate buydown. It's less cost to the seller and makes a much bigger difference to the buyer.

 

Let me now if you have any questions on it..I can send you a great flier on how to do it.

 

Thanks for the post

Travis Newton

Today's Mortgage Group

Aug 24, 2008 10:16 AM
Ann Hayden 636-399-7544
Berkshire Hathaway HomeServices Select Properties-St. Louis Missouri - Chesterfield, MO
SelectAnn.com

Frank,

I totally agree waiting is not the best idea.  Some sellers do not care to take our advise seriously.  I do not understand this.  Would they not listen to their brain surgeon??

Great post,

Ann

Aug 24, 2008 10:49 AM
Frank Jewett
tech4REpros - San Jose, CA

Ann, some sellers are confused by organized real estate's attempts to claim that the market has hit bottom, is "robust", or whatever.  It's a shame NAR and local boards have decided to try to pump up market conditions at the expense of their own credibility.  Their tactics are simply dragging out this market correction by spreading a false hope that prices have stabilized and could start rising again. 

Aug 24, 2008 11:49 AM
Linda Mae Croom
Topock, AZ
(928) 768-3040

Good solid post. Waiting is not the answer. Prices may be down even more and true, the interest rates will more than likely go up. There is no advantage to waiting unless as you stated it is at least 3 to 5 years OR MORE!

Aug 24, 2008 12:28 PM
Eunice Waller
Berkshire Hathaway HomeServices Simpson Realtors - Locust Grove, VA
Working Together, We Can Do Great Things

Hi Frank,  Agreed! Interest rates may be higher and prices lower.  Now is the time to purchase a home!

Aug 24, 2008 11:14 PM
Ann Hayden 636-399-7544
Berkshire Hathaway HomeServices Select Properties-St. Louis Missouri - Chesterfield, MO
SelectAnn.com

Frank,

I think the "general" media has killedthe market and NAR is trying to counteract some of that.  Not all areas are in great turmoil but to hear the news, you would assume the whole country is going down.  It might who knows.  But then speculation has never been a strong point for anyone except maybe Warren Buffet.  ;-)

Ann

Aug 25, 2008 07:18 AM
Frank Jewett
tech4REpros - San Jose, CA

Ann, NAR's story changed dramatically when they testified before Congress.  That speaks volumes.

Aug 25, 2008 06:29 PM
Ann Hayden 636-399-7544
Berkshire Hathaway HomeServices Select Properties-St. Louis Missouri - Chesterfield, MO
SelectAnn.com

Frank,

I agree changing their stance does speak volumes.

Ann

Aug 27, 2008 01:48 PM
James A. Browning
Browning Real Estate School/REO Institute - International, IT
MRE REOCertified(R) SSCertified

Thank you for sharing your blog; we need Real estate Professionals to share their comments and information regarding their markets and experiences. Thanks again from beautiful Colorado; Spring is here in the Rocky Mountains

May 07, 2012 02:37 AM
Brian Sharkey
SharkeyRE LLC - Tequesta, FL
SharkeyRE - #SouthFloridaBroker

Very interesting post, I really enjoyed reading about this.

 

Thank You for sharing,

 

 

 

Brian Sharkey

 

Jul 01, 2013 12:06 AM

What's the reason you're reporting this blog entry?

Are you sure you want to report this blog entry as spam?