This market has people saying and doing crazy things!!!!
I was called by an expired listing that had been on the market for over a year and with several different agencies. The home is located in a nice area but is on a smaller lot than many of the homes and was constructed with builder grade finishes. Because it is in the upper price range for the area ($600,000) recent sales included two foreclosures.
I concluded my analysis of the situation to be that the home was vacant, unfurnished, no window treatments, sub standard kitchen for this price range with oak cabinets and white appliances and that while I did not feel they would benefit from a kitchen remodel buyers would certainly see this as a huge negative and we needed to price the home accordingly.
This is an excerpt from the sellers email response…..
“While I certainly agree that we are in a declining market, I feel it is influenced by the approach that is being taken to recommend that sellers continually lower prices below market value, thus feeding on the buyers’ “upper hand”. If the market would simply stabilize, and realtors would encourage and support sellers in their pricing, then buyers would be faced with paying what I consider to be a fair, not inflated, price for homes. I certainly believe that realtors need to look at comps, but that is not what I feel is being done. One of the houses that were part of the “recently sold” was clearly a foreclosure that was appropriately stated to be $200,000 below current market value. That person was in a position of being forced to sell at an artificially low price and, to me, should not be much of a factor in our analysis.”
Which got me to thinking about a few things……first, what is “market value”?
Here is my definition of market value: The price a seller can expect to receive from a buyer in a fair and open market.
So, if the market is driven by having many REO properties, the traditional seller can expect to get what the REO properties are selling for or maybe a little bit more if the REO’s are sold “as is” and the traditional seller sells in good condition.
Second, how important is it to list a property at or below the estimated “market value”?
In the case of the listing I was evaluating, it has been reduced numerous times over the past year. However, at this point in time, it needs to be at $599,900 or less and the seller wants it at $650,000. I did a detailed analysis of recent sold properties making adjustments for the differences and also did a price per square foot analysis all of which pointed to the conclusion of $599,900 (or lower). I can say with a high degree of certainty that it will not sell for this price and that pricing it at $650,000 will just continue to prolong the days on market and further lower the seller’s equity position. I think the sellers reluctance to listen to the advice of their real estate professionals has cost them tens of thousands of dollars and that they will continue to lose money if they do not listen to what the experienced professionals are showing them.
So, Mr and Mrs Seller, I understand your frustrations at the loss of value in your home but the market will not “simply stabilize”. It is driven by many factors and right now it is being driven down. So, if you want to sell, price it right and sell it quickly because next month it will be worth even less!!!! Time is your enemy not the real estate professional.
If you would like a thorough and professional analysis of what your home is likely to sell for under the current market conditions, please give me a call. I spend about three-four hours compiling and preparing a report of 40 pages of information to determine the "best" price for you to list your home for.
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