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Real estate sales hit and all time high in 2005, everything
was favorable for sellers: High prices at closings, high percentages
paid in relation to the asking prices, and a large volume of
transactions defined an extreme seller's market. But that all
ended during the first quarter of 2006; There was a rise in
mortgage rates, tax assessment reevaluations were put into effect
for many areas in the spring, and continued reports of a slowing
economy and a "bottoming-out" of real estate sales in the media
all contributed to a market softening. How? Well, we lose Buyers
and Buyer interest when mortgage rates rise and when the media
exaggerates poor market conditions. And, although interest rates
are still extremely low historically speaking, lower range buyers
lost a bit buying power when rates rose. Rates declined a bit
and inflation steadied, but purchasing activity only just began
to recover.
Additionally, with new higher tax assessments, many of the people
that felt their new taxes will be too high, put their homes
on the market…forcing a steeper increase in inventory than would
be necessary. The laws of supply and demand, then, promise values
will drop. Sad, but, true…and they did. Some areas even suffered
further at the hands of their own neighbors… one town voted
on whether or not property taxes could be increased to help
the school system and the majority that voted chose lower taxes
instead of bettering the towns best asset. So, now townspeople
are saving a few hundred dollars on the property taxes, but,
their property values have decreased by the tens of thousands
in some cases
So, with high supply and a decrease in demand for certain market
price ranges, days on market, and asking price-to-sale price
margins have increased. Inventory in many sought-after communities
rose by about 25% and as much as 50% in other areas. The sales
prices have adjusted. Sellers now compete for Buyers and Buyers
have become more choosy picking through the better inventory.
Buyers now continue to pay lower percentages of asking prices.
No signs of a bubble bursting on a national level. Keep in
mind that the "Real Estate Market" is very segregated,
just like the stock market, keeping an eye on local markets
may prove national predictions wrong. There is no disputing
a decline in overall prices, sales volume, margins and percentages,
as well as increased days on market for many areas. However,
inventory has fluctuated by 10's of percentages in some areas,
gone up for the first two quarters of 2006 and began decreasing
significantly by the last quarter of the year…So, time
will tell as to whether or not prices will continue to decline
or finally level off. Yes, in some areas, especially the south
and those areas that attract retirees, and, of course the
areas where short-sited politics has adversely affected property
values….Yes, Yes, values have declined so drastically
one can almost hear the "popping" sound. But not
everywhere, and certainly not in all parts of New England.
As always, allow for maximum exposure of your listing.
This will occur with a real estate firm that participates
in an MLS service connected to a search web-site. The firm
should also participate in IDX, a web network that pulls your
property's criteria from MLS and offers it to other real estate
firms that also participate in IDX, so clients searching for
property through other firms' web-sites can access your listing.
Be aware of the different types of agencies out there, you
do get what you pay for in commission. In addition, frequent
open houses capture the curious Buyers without agents. Overall,
want an agent that has good follow-up and follow-through skills.
You should feel like a person they care about, not like a
paycheck.
Prior to listing your house, watch inventory numbers in your
market-segment before finalizing your initial asking price.
Determine if there is saturation or depletion of price ranges
your property may end up in, and track price-to size and neighborhood
correlations to compete well. Try to be realistic, but leave
wiggle room in the price for negotiations: all consumers like
to feel as if the got a good deal, especially today's home
buyers and real estate investors. Challenging the market for
a short period of time is not recommended in this selling
atmosphere, though. Your home's days on the market are sure
to be higher than in recent years, and you do not want to
waste valuable selling time on a whim or a too-high initial
Asking Price.
In terms of property condition, remember, a house that looks
loved and very-well cared for always sells the fastest. Also,
with more for Buyers to choose from, note that there is probably
a similar house available nearby for sale. That means fix
those nagging items, invest in system replacement and structural
repairs when necessary. First impressions are the hardest
to break, so make sure that the entrance to the property,
all doorways, and floors are in tip-top shape. Clear all clutter
away and pack up very personal or unique items, storing things
neatly in boxes in the basement or off the premises. And finally,
let a fresh coat of paint help your home sparkle! Think neutral,
appealing to the masses, not just to the people with your
taste. Your home should be in the best possible showing condition
the first day it can be shown.
A final way to compete in a saturated market or price-range
if you can only afford to do one small thing, is to invest
in a pre-listing inspection and a home warranty program, especially
if there are many older mechanics and appliances in the house
that will convey in the sale. A pre-listing inspection ensures
that both you and your Buyer will not be surprised by unexpected
deficiencies. Doing this also keeps the Buyer from gaining
a negotiating advantage in the event a problem item is expensive
and impossible for you to repair prior to closing.
Lastly, remember to be honest on your Seller's Disclosure
of your home's condition… fix the items that are fixable
and disclose what you know that you cannot change for your
own legal protection. It would be unfortunate to be using
the proceeds of your sale to retain a lawyer for a suit being
brought against you for suspicion that you had knowledge of
a latent deficiency of the house you sold, but did not forewarn
the Buyer of it
.
Being proactive about property condition and asking price
are great ways to ensure a better price and faster sale. Remember
you are competing for Buyers, so be competitive.
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