It seems like things are getting tougher and tougher in the world of real estate. More and more "for sales" are popping up, interest rates have creeped up a bit, the buyer tax credit is nearing its end, and short sales and foreclosures continue to spatter the inventory. And yet, it is still difficult for some to accept that no one is immune from the rippling effects of these conditions.
Those of us who are in the business of residential real estate sales hear it all the time. "I need to net this amount of money, so I need to price my house here." If only it worked that way. But it doesn't. It simply doesn't.
In this complicated market, prices continue to drop. In our area, we rarely see a home sell for its assessed value anymore, much less fair market value. So if a seller is selling within a couple of years of buying and has made minimal improvements, if any, chances are they will not be making a profit. No matter what is wanted or "needed" to net from the sale, the buyer will determine what the home's value is.
Remember that today's buyers are pretty savvy -- they know what you paid. They know what the assessed and fair market values are. They know what comparable homes in the neighborhood have sold for. And they know that home values have fallen over the past few years and unfortunately continue to do so.
If your goal really is to sell your house, you must price it appropriately. A buyer doesn't care how much you need or want to walk away with at the closing table. So price it to sell, not to sit.
Good post!
Thank you, Josh! Have a good weekend. :)
Excellent post with good information.
Ah...the truth hurts. AND being the bearer of truth can be painful. Hopefully the numbers tell the story most of the time and are not debatable....but folks can still look at the truth of the numbers and deny reality. I think I'll have a big glass of burgandy now.
Lyn -- Thank you. And thank you for the re-blog! You made my day. :)
Steve and Jan -- Being the "bearer of truth" certainly can be painful and a little scary. But I know we're only doing our sellers a disservice by not telling them the truth. Hope you are enjoying your glass of burgundy. I'm going to have myself a glass of Riessling... Ahhhhh....
The seller must be motivated by the pain that he or she will experience if the property does not sell for the price they really want. That pain must outweigh the pain of losing money on the sell. Your post sets the groundwork for sellers to come to grips with this.
Thanks,
Cal
Cal -- Pain -- that is certainly what so many sellers are having to deal with. It seems even those who have lived in their house for 20 years are feeling it. This market has certainly been and continues to be a learning experience in helping them to "come to grips with"it. Thank you for your thoughts.
Todays buyers know EVERYTHING! I can't believe what they come up with some times....
peggy, its just like the stock market....doesn't matter what you paid for the stocks, when it comes time to sell, its what the market bears...and sometimes that is not good news for the seller...
Pat -- Amen to that. If nothing else, this market is making me more thick-skinned than I ever thought I'd be!
Good post, Peggy! And you are so right about what one needs to net not being what drives value!
Patricia -- Why is it everyone "gets it" except those that really need to get it?? :)
The concept is basic but some Sellers just don't want to hear it???
Peggy:
A home is going to sell for market value, no matter what the owner paid for it, owes on it or the lovely color they have painted it.
Good point, Peggy - I often want to ask such sellers how they would feel if they were told that the buyer can only afford so much of a mortgage because they HAVE to pay cash for the kids' education - exactly, who cares?
Betsy -- I have never had the struggle I'm having now getting sellers to understand this idea. Very frustrating.
Claudette -- Amen!!! Would you mind calling the seller I'm having this conversation with right now and telling him that???? ;)
Peggy -- That is an excellent thought -- I actually think I'm going to try that with this particular seller. Wish me luck!
Excellent point. If only seller would understand. Sometimes, we have to remind them the principal of supply and demand, how that impact the price and hence what they can net instead what they want to net.
Mike -- Another good point -- supply and demand. I've used that in the past, as well, but not always with success.
HGi Peggy, That statement by the seller is the first and maybe the most important red flag you or I will hear.
I agree with you 100% - if only sellers would listen to us. I've reblogged your post - thank you!
Great post about reality and setting realistic expectations!
I've got one of those potential clients right now. I'm not even sure if I'm going to take the listing.
Bill -- You are right on -- definitely a red flag.
Margaret -- Thank you for the re-blog!!
Russell -- Thank you!
Cynthia -- I've got a few of these clients right now and am feeling very defeated today. Sigh...
Hi Peggy...This has never been more true than the past couple of years. However, tellling clients that and getting them to "understand" it is not so easy. Everyone thinks there property is special. Around here sellers often tell us that they don't need to sell. My answer is that no one needs to buy their house. Harsh but true.
Kate
Kate -- I have to admit I'm pretty worn down by the resistance I've been getting lately. I just emailed another selling explaining that the "truth" is difficult for any seller to digest regardless of how long they've owned the property, the property's condition, their reason for selling, the balance on their mortgage, etc. We'll see what response I get...
It can be really difficult for the seller to face the truth - but absolutely essential that we are straight with them anyway. Buyers just don't care AT ALL what the seller is hoping/needing to net, how much they've put into it, how they think it is far nicer than the identical house down the street etc etc etc. Most buyers I am seeing these days are way more worried that even if the price seems fair to them they might be overpaying if the market drops more - they almost want to build in a "cushion" just in case...
Nancy -- I'm hoping somehow gives me a "magic script" to get sellers to understand this. Keeping my fingers crossed!
Peggy, It's a hard pill to swallow for sellers who bought their houses in the last 10 years.
Linda -- It sure is. I'm finding it's even hard for some who bought 15+ years ago!