In most areas of the country, 2007 marked a change in the residential home-sale market. Buyers gained clout for the first time in over a decade. Inventories of homes for sale grew to record levels in some places. Price reductions, which carried a negative stigma when listings were easy to sell, came to be seen as a necessary part of the home-sale process.
That is not to say that price reductions are a good thing. They are not. The initial marketing effort is a prime opportunity to attract attention to a new listing.
When the merchandising and pricing are on target, a timely sale occurs. If the opportunity is missed either due to poor planning and preparation, or to a price that’s too high for the market, the only hope for success is to lower the price quickly to an acceptable level.
Many sellers balk at the notion of reducing the list price soon after the property is listed. However, the timing of a price reduction is critical. If you wait too long, hoping for the impossible, it could be difficult to kindle enthusiasm for the property.
This is particularly so in an area where there are a lot of new homes coming on the market and where the sales volume is low. This means that the competition from other listings grows as you wait for the unlikely: a knight in shining armor to appear and pay the asking price or more.
HOME SELLER TIP: The best time to make a price reduction is as soon as you discover that your home is priced too high for the market. Waiting too long to lower the price can cost money in the long run if the market is moving lower. Reducing too little, too late can lead to a series of further reductions and ultimately to a lower selling price. Ideally, you should avoid such an unpleasant downward spiral.
The goal is to sell without having to reduce the price. To do this, you must accept current market conditions. You also need to recognize that no matter how wonderful you think your home is a buyer will find fault with it.
To be a successful seller in this market — and to some extent in any market — requires separating pride of ownership in the property from the task as hand, which is to sell for the highest price possible. It’s not easy for most sellers to put their emotional feelings about their home on ice. It helps to stop thinking of the property as “home” and to start looking at it as a commodity you want to sell.
Before listing a property for sale, sellers should seriously consider their motivation. Successful sellers in today’s more difficult marketplaces have a compelling need to sell. They don’t simply want to sell if someone will make it worth their while. Many of today’s prospective home buyers have a wait-and-see attitude about the market. They are looking, but it will take a fabulous home offered at a great price before they’ll commit to buy.
Sellers should also check out the temperature of the local market. Residential real estate is a localized business. Even if you live in a city where prices are down, that might not be the case in your neighborhood. The supply of homes for sale and demand for housing are critical variables, as is the local employment picture.
There is a common theme to the listings that sell well now. These listings look great, are in good condition, don’t have incurable defects and are priced right for the market.
THE CLOSING: Being realistic about what to expect is half the battle.
Dian Hymer is author of “House Hunting, The Take-Along Workbook for Home Buyers” and “Starting Out, The Complete Home Buyer’s Guide,” Chronicle Books.