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Posts Tagged ‘home pricing’

One Reason Some Properties Stay on the Market for Way Too Long

Posted in General Real Estate Market, Iredell County, Lake Norman, Real Estate, tagged , , , on November 14, 2012 | 1 Comment »

I have some buyer clients coming to the Lake Norman area this weekend.  They’ve already visited once and become somewhat familiar with our market, our communities, and some of our neighborhoods.  In planning the next trip, they asked about a property in one of the neighborhoods in which they have an interest.  According to the property’s statistics, it’s been on the market a LONG time.  They asked me to look into it to see if I can figure out why.  That I did, using our MLS history and tax records.  After scanning all of the info, it became somewhat clear why the house has not yet sold, at least as far as can be told without a conversation with the sellers.

MLS Average Price per Square Foot
Click to Enlarge

The house was bought brand new in 2006 for a bit under $310,000.  For some reason, the sellers put it on the market around a year later for almost $350,000.  Why would anyone try to sell so soon, and for such a substantial increase over what they paid?  That information we can’t know, but it would be a good guess to say that the sellers had a change in circumstances that forced them to put the property on the market.  At that time the market was about 6 months before hitting the pricing peak (see graph), so it was understandable that the sellers could be optimistic about getting more than they paid, but that was a big jump for one year.  As we know, in early 2008, the housing market, along with the general economy, started to decline.  Nobody knew how far things would drop, but the direction was definitely down.  The problem with moving markets, particularly down ones, is that to price things right, one has to guess where the price will be in the coming months and adjust accordingly.  The sellers stood pat for quite awhile, then eventually made a small reduction, and rode that for a long time.  The property didn’t sell.  They took it off the market for an extended time, and then re-entered the market with a $50,000 reduction.  Following this, they further reduced it to $260,000 where it is now.  That price is now somewhat competitive with the neighborhood comps. So, they started at $350,000, and now it’s at $260,000.  From what I can see of the property on the MLS, it looks to be a very nice house with some good upgrades, so there’s no apparent issue with the condition or location.  Quite often, this scenario ends up as a short sale and possibly eventually a foreclosure.  Whatever caused the sellers to price the way they did when they started out, obviously, it was a plan that was doomed to failure.The lesson here is that when you are pricing a house using a Realtor, demand that the Realtor be brutally honest about the pricing, with an eye toward the direction of the local market.  Don’t adopt the “I’m not going to give it away” attitude if you really want to sell.  If you price the property too high, you won’t be giving it away because you won’t be selling it.  Your Realtor will do just as an appraiser will do- check out recent sales of comparable properties, and take a look at the local competition.  You’ve got to look at your property the way a buyer will see it along with all the other available properties.  When a buyer is ready to negotiate, they’ll have their Realtor provide local recent sales for comparison because no one wants to pay more for a property than others have recently paid.  Recent sellers establish “market value.”  Also, if you’re getting a mortgage, the lender will have their appraiser do the same thing to establish local market value.  The buyer may agree to too high a price, but their lender won’t- no mortgage, no sale!  In this case, the high price will have just wasted more time on the market.

Always remember that one way or the other, time is money, whether it be in carrying two mortgages, or just paying interest and taxes on a property too long.   The sooner you sell, the better.  So, the more reasonably priced the property relative to the current and future market, the faster your property will sell.

We’re starting to finally see some price appreciation in our local market, so hopefully this situation won’t happen as often.  Nevertheless, sellers still must price their properties within a range that will appeal to buyers in the market.

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Struggling with List Prices

Posted in General Real Estate Market, Iredell County, tagged , , , , , , on July 16, 2010 | Leave a Comment »

I withdrew one of my Iredell County listings today by mutual agreement with my seller clients.  We had put the house on the market last spring, and priced it according to what little history was available in the community for similar houses.  We agreed that if the house didn’t get some showings, the sellers would agree to lower their list price.  Time passed, and we did get a few showings, but no offers.  It tried to get them to reduce their price to get more traffic through the house, but they felt at that point that they couldn’t do it.  In the meantime, houses in their neighborhood were being sold as foreclosures or short sales for much lower prices than what we would have previously expected.  Those sales have pulled the “comps” down to the point where our listing was getting no attention whatsoever.  The sellers don’t have to move and decided to just pull the house off the market and wait for better times.  I cautioned them that per the economic gurus’ recent statements, those good times will be several years into the future.  One economist said yesterday that the glut of foreclosures will not be absorbed by the market until sometime in 2013.  Of course, things can happen that the economists don’t foresee that could improve the picture sooner than that, and I hope they will.  I’ve seen that happen in the past, but it’s not something you can count on.  Real estate sales prices in our area continue to be soft and continue to drop in some areas.  If you don’t get ahead of that curve with your list price, the market will ignore you.  It’s a tough lesson, but true.

This is a time when sellers who need to sell and are able to sell can find buyers, but at much lower prices than in the past.  If they do that and then become buyers of their next home, they can come out “smelling like a rose” because they’ll buy the next house at a similarly low price and at 50 year low interest rates.  If you don’t need to sell or the numbers don’t work for your sale, then you may as well stand pat.  It serves no value to the seller or the listing agent to try to market a property that is priced above market.  Marketing has its limits, and no amount of marketing will cause a person to pay a too-high price when there are better valued alternatives available.

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December Charlotte Area Real Estate Stats

Posted in General Real Estate Market, Real Estate, tagged , , , , , , , , , on January 19, 2010 | Leave a Comment »

For those of you who love to look at numbers and draw conclusions, here are some residential real estate stats from December of ’09 for our Carolinas Multiple Listing Service area of Mecklenburg and surrounding counties.  My own opinion is that positive change in average price numbers is worth considering to a degree, but the contract and closings volumes don’t mean much since they were influenced by the anticipated end of the First Time Home Buyer tax credit, originally scheduled to end on November 30, 2009.  That tax credit has been extended for contracts signed by the end of April, 2010 and closed by the end of June, 2010.  It was also extended to include repeat buyers for the same dates, so we’ll see this winter and spring if those tax credits influence the sales and stats as much as the first round did.

Residential contracts reported        December 09 – 1,466

December 09 contracts reported increased 14.1 percent over December 08

December 09 contracts reported decreased 10.9  percent over November 09

Residential closings reported        December 09 – 1,527

December 09 closings reported increased 13.1 percent over December 08

December 09 closings reported decreased 23.6 percent from November 09

Average sales price            December 09 – $211,705

Average sales price in December 09 increased 5.7 percent from December of 08

Average sales price in December 09 increased 8.4 percent over November 09

Average Days List to Close                December 143.8

Of reported home sales that closed from December 6 through January 5, 2010, 44 percent closed in 121 days or more; 15 percent closed between 91 and 120 days; 19 percent closed between 61 and 90 days; and 22 percent closed in 60 days or fewer

List to Close  down 3.7 days in December 09 over December 08

List to Close ­ up 1.6 days in December 09 over November 09

The bottom line is that for a person who is thinking about buyer or selling and buying another home, there are some very good things going on that would suggest you go ahead with your plan.   Prices are still low (good for buyers) and people who sell now at what they consider a discount will turn around and buy their next home at a similar discount, and do it at historically low interest rates.  If you’re an investor looking for rental properties, you know you’ll get some great deals now, and there are plenty of renters out there.

If you want to see even more numbers, or more localized numbers, call me. I’ll be glad to get them together for you.

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No Point in Listing Too High

Posted in Finance, General Real Estate Market, Real Estate, tagged , , , , , , , , , on November 19, 2009 | Leave a Comment »

The good news is that there are buyers out there, especially since the passage of the expanded home buyer tax credit which now offers a tax credit for current homeowners who want to sell their home and buy another primary home (see details HERE).

The problem is that some of those people thinking of selling their home don’t understand how home purchases and mortgages work.  That causes them to be tempted to price their home too high when they list it.  I call this the “waiting for someone to show up with more money than brains” syndrome.  Fact is, that just will delay the sale of the property, if it sells at all.  If the case of the tax credit, not selling soon enough means you’ll lose the tax credit because of the time limits.  There are two  main reasons for this.

  1. Most buyers will be working with a “Buyer’s Agent,” an agent whose responsibility is to help the buyer find the best property at the best price.  No, they won’t try to jack up the sale price just to get a few more dollars in commission.  First, they have a fiduciary duty to their buyer client to help them get the best deal.  The second reason for this is tied to the point below.
  2. Unless a buyer is going to make the purchase with all cash, then there is a lender involved.  If you think about it, at closing, the lender owns most of the house, with the buyer having equity equal to their down payment.  The lender sends their appraiser (who actually works on behalf of the lender. not the buyer) to appraise the value of the house relative to the local market.  If the house does not appraise at a value at or above the contract price, then the lender will refuse the loan unless the buyer is willing to make up the difference.  The lender does not want to be stuck with a big loan on a property that was over-priced, in case the borrower defaults on the loan.  So, to go back to point #1, the buyer’s agent will advise the buyer not to agree to pay too much because the lender will refuse the loan in most cases.

So, like I said, there’s just no point in listing too high.  When agents are looking at sold properties on the MLS, we can see the entire history of a property’s listing.  It is not unusual to see properties that sold 10, 15, or 20% below their original listing price, and see that the seller kept dropping the price for a year or two, always being behind the curve of price changes, until they finally got desperate and set the price in line with the market, when it then sold.  Some of them waited too late and were forced into a short sale or foreclosure.

Pricing it right with the current market will get it done and cause much less stress on the seller.  By the way, I can help you set a proper listing price based on research I do on recent sales and current competition.

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Home Prices- Location, Location, Location

Posted in Finance, General Real Estate Market, Real Estate, tagged , , , , on October 2, 2009 | Leave a Comment »

…Speaking of real estate prices (see yesterday’s post), real estate professionals have always said that one of the key factors in a home’s price is location.  Still, since most people spend most of their time in only one location, this fact can be hard to grasp.  Well, Coldwell Banker recently released a study of the cost of an average four bedroom “move up” home in different locations around the country.  The numbers are striking.  They range from $112,675 in Grayling, Michigan to $2,125,000 in La Jolla, California.  Talk about hard to grasp!  Talk about location, location, location!  This compares physically similar 2,200 square foot, 4 bedroom homes!  You can see the press release HERE which includes charts of many of the locations studied and a link to all the data.

If you’d like to see how the value of your home compares to other locations, you can do that with Coldwell Banker’s Home Price  Comparison Index tool HERE.  It’s a pretty cool tool.  You ought to check it out.  If you’re planning to move from your current area, this can be very useful to get an idea of what you’ll have to pay for a similar home.

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Area Home Prices Show Decline- What to Do?

Posted in Iredell County, Lake Norman, Real Estate, tagged , , on July 3, 2009 | Leave a Comment »

The most recent Standard & Poors/Case Shiller home pricing report shows that prices of Charlotte area homes are down 10% over April of 2008 (see the Charlotte Observer article HERE).  Our area was one of the last to be affected by the downturn, and since some of the hardest hit areas are starting to improve a bit, we may be one of the last to show some solid improvements in prices and sales volume. 

Still, as I’ve said before, you’ve got to be very careful in how statistics are put together and what conclusions you can draw from them.  I saw a comment in a real estate forum about this the other day that said you may see statistics on home prices in some areas increase because more high priced homes are being sold after going through foreclosure!  Mathematically that makes sense, but at a gut level, it seems strange- if more high priced houses are sold, although at lower than previous market prices, then that will take the average up.

The lesson in all of this is that if you have a house on the market, you’ve got to recognize what’s going on in your market and price accordingly.  If not, you’ll just get the results most sellers are getting- few showings and fewer offers.  I ran a search on one of our systems that shows the number of showings of houses on the market by price range and location.  Houses in Iredell County and around Lake Norman in the $150,000 to $250,000 price range have had an average of 8 total showings since January 1, 2009.  Looking at other price ranges, the number of showings gets somewhat lower as the price range goes up.  What this means is that if you want more showings than average and the resulting greater likelihood of an offer, you’d better be priced lower than average.  I know that hurts, but remember that if you are going to be buying another house in the same market, the sellers will be facing the same price pressure as you have, and you’ll likely get an agreement at a lower price than previous market, also.

If you’d like for me to run a showing stats report for you with different price ranges and areas, let me know.

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Price History on MLS- Did You Know?

Posted in General Real Estate Market, tagged , , , on February 12, 2009 | 2 Comments »

When I was much younger, I was a fan of the Rocky and Bullwinkle Show on TV.  They had lots of funny bits their characters would do, and one of them that has stuck in my mind was when the young scientific geek Sherman and his amazingly intelligent dog, Mr. Peabody, would go back in time in their “Wayback Machine” (WABAC).  In some ways, databases and the Internet are a sort of Wayback Machine of today.waybackmachine3

I’m working with a couple of clients who have had their property listed previously by a couple of other agents but have not been successful in getting their house sold.  In talking to them about selecting a listing price that will bring success, I showed them what we call the Archive Search that agents can perform in our MLS database.  The Archive Search allows us to look up any property which has been on the market and determine the price history of the property.  This means that we can look it up by the address rather than by a particular MLS number so that we can see when a property was first listed and follow price changes, usually reductions, to get a sense of how the market has reacted to the house at particular prices and to gauge the motivation of the sellers.  Buyer’s agents do this to help recommend an offer price for a property for their buyer client, and listing agents do this to help determine what price levels have not brought showings and/or offers in the past.

This ability to see the price history also negates the value of taking a house off the market for a few days then re-listing it for the same price just to make it look like a new listing.  This won’t fool many buyer’s agents.

If you have your house listed and have made some pricing changes, you need to be aware of this since price reductions will be captured for review by buyer’s agents.  This is why it is difficult to reduce a listing price to a certain point then change it to a higher price.  If you are tempted to do this, you should understand that you need to have a clear rationale for doing this such as making upgrades to the home or recognizing that the market has changed and you’re still staying competitive with the other houses on the market that are your competition.  Buyers will always look at what alternatives they have of available properties, and if the market picks up, you may be able to increase your price and still be the best value.  Still, having the past lower listing price on record will make the negotiation process more challenging once you get an offer simply because the potential buyer and their agent will know that at one time you would’ve taken that lower price.

That’s one of the facts of computers and the Internet- they have long memories.  The Achive Search is our Wayback Machine.  If you’d like to have the pricing history of a house that you’ve had your eye on, ask your REALTOR to get it for you, or if you are not working with a REALTOR, feel free to call me.

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Why in the World Would I Sell My House Now?

Posted in Finance, General Real Estate Market, Real Estate, tagged , , on December 29, 2008 | Leave a Comment »

Why, indeed?  You’d think that based on what the media gloom and doom writers have to say, you’d better wait until the bottom of the housing market comes.  You can pick the bottom, can’t you?  No?  You mean you’ll know when we’ve seen the bottom only when we see it in the rear view mirror?  What good is that?

OK.  Enough questions.  Here are some answers.  If you have been wanting to move, whether it is to get a larger house, a smaller house, a different location, or whatever, as long as you plan to buy another home and you have some equity built up on your house, the slow housing market really doesn’t matter.  What does matter is that the same market forces that would cause you to price your home lower than you’d like is causing the sellers of homes you’d consider buying to do the same thing.  The amount of price reduction is most clearly the same for both houses if you are in the same market area as the house you’d like to buy.  Think of it this way, if your house had a market price a year ago of $200,000 but today would have to be priced at $ 180,000, that’s a 10% reduction- OUCH!  But, it is likely that the $300,000 house you were looking at is taking the same 10% hit, then the price for that house would be $270,000.  In the first case (the one you thought you’d like to have), the price difference is $100,000.  In the more realistic current market, the price difference is only $90,000.  Now, tell me which is the better time to buy.  Oh by the way, Kim Peschock, our Century 21 Mortgage rep just sent a note to tell us that the 30 year mortgage rates are holding at between the high 4%  and mid 5% range.  Fifteen year rates are slightly lower.

I’m not suggesting that if you have concerns about your long-term employment that you should be doing this.  However, if you are in a stable situation and have been holding off on a change in your housing situation, now is actually a good time to buy.  Sales volume is slower, but the buyers who are in the market are better qualified than we’ve seen in years, and they are better motivated, too.  The sellers in the market are figuring out this price differential business and are pricing very aggressively.

In November, according to National Association of Realtors, the annualized home sales rate was 4.5 million homes sold.  No, the market is not dead.  If you are one of those involved in one of the 4.5 million homes sales, the market is good!  I’ve got a very good video called Pricing Your Home to Sell by David S. Knox who explains this value phenomenon in more detail.  If you’re local to Iredell County, call me, and I’ll let you borrow it.

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