What Sells Homes in This Market: Price, Price, and Price

There is an interesting editorial over at Bloomberg by John Wasik today on selling homes in a down market. He goes through the typical litany of how down the housing market is, but inside of the piece he discusses what will sell a home in this market.
He focuses on pricing a home correctly, and I think he is dead on. I was out doing an information look at housing recently in a seaside southern city and was amazed at the huge distribution in housing prices. The city had seen a huge run up in housing costs, from an average of 185,000 in 2001 to over 400,000 in 2006. Now there is not a street that does not have a home for sale.
But driving around the housing prices were still priced with the full appreciation even though any logical person would scream that there are way to many homes on the market. It seems that the paper profit has been locked in by all parties and no one wants to be the first to cut their prices.
So the inventory is just sitting, lots of empty homes, builders asking for the moon, and real estate agents living on beans and rice. Yet we did come across a couple of homes that accepted reality and had cut their prices. My guess is that the next time I am looking in this city these homes will have been long been sold while the others whither on the vine.
When you price your property, you need to employ a strategy that can run counter to your emotional perception of the home’s value. That sometimes means listing at a price far below what you have anchored upon. Like any commodity, a home’s price will follow supply-and- demand trends. In theory, custom homes in desirable neighborhoods should hold their value. Other properties should be discounted depending on how many similar homes or condos are on the market. Every market is different, though. “If you don’t get any calls on your listing price after a week, drop your price $10,000 or about 2 percent of your original asking price,” Morgan says. “The market will tell you what the price of your home is. You better be priced 10 percent under your competition — and then be prepared to think about accepting offers under that.” I know that’s a disheartening strategy. Yet if you have to sell now, you need to take an honest look at housing inventories in your area. via John Wasik at Bloomberg.com

What is in a Word?

The real estate world has always used buzzwords when listing a home. These words will typically mean on thing when the agent see’s them and another for the general public. For example, when a real estate agent reads the word cozy they will picture claustrophobic while a buyer will read small but comfortable.

The Seattle Post Inquirer has a great chart on how these buzzwords affect housing sales by time on market and selling price. For the agents over this Thanksgiving Weekend, please put in your favorite buzzword and whether they work when selling a home both in pricing and how quickly it will sell.