Tuesday, March 4, 2008
How to Price Your Property in Today's Market
If that isn't a loaded question! Now more than ever, it takes much expertise and research to find the "sweet spot" in pricing property in today's market.
In the past, we performed a "Comparative Market Analysis." This process looked at comparable properties on the market, as well as recent properties sold that are similar to yours and determined a market value based on those comparisons. This process was weighted towards the active properties, trying to determine how much you could ask in a rising market. If you were a little high, it just took a few months longer for the market to catch up to your price and it eventually sold.
In today's market, where we're experiencing 60-70% expiration rates, (meaning 6-7 out of 10 properties on the market, aren't selling) and declining market values, therefore we must adjust our approach to establishing a true market value.
In a declining market, we have to focus more on the recently sold comps, because instead of pricing slightly above the last property that sold, we need to go the opposite direction and price it below the last sold comp. In this kind of market, competative isn't good enough, we need to be compelling! If we don't due this, the market will continue to decline and fall away from your price position and essentially be running away from you, leaving you to have to take desperate measures to get out in front of it again and have any chance of selling.
Another conversation I'm having with many of my seller clients, is what's your "Plan B?" Meaning; what are you gonna do if it doesn't sell? Stay in it, rent it, let it sit vacant, or worse yet? I do this to force them to consider the fact that it may not sell and to help determine how committed they are to selling. If they don't have to sell, I'll tell them to wait it out until the market rebounds and tips back in their favor. If they're committed to selling, we'll establish an aggressive pricing strategy, matched with an affective stagging plan and this should catch buyers attention and get the job done.
Now this may seem a bit harsh, but it's my job, as a real estate professional, to be truthful and honest with them, so they can make informed decisions about their biggest investment. It's not personal, it's simply interpreting the market and relaying how it impacts them and help them develop an affective plan to get the job done.
In the past, we performed a "Comparative Market Analysis." This process looked at comparable properties on the market, as well as recent properties sold that are similar to yours and determined a market value based on those comparisons. This process was weighted towards the active properties, trying to determine how much you could ask in a rising market. If you were a little high, it just took a few months longer for the market to catch up to your price and it eventually sold.
In today's market, where we're experiencing 60-70% expiration rates, (meaning 6-7 out of 10 properties on the market, aren't selling) and declining market values, therefore we must adjust our approach to establishing a true market value.
In a declining market, we have to focus more on the recently sold comps, because instead of pricing slightly above the last property that sold, we need to go the opposite direction and price it below the last sold comp. In this kind of market, competative isn't good enough, we need to be compelling! If we don't due this, the market will continue to decline and fall away from your price position and essentially be running away from you, leaving you to have to take desperate measures to get out in front of it again and have any chance of selling.
Another conversation I'm having with many of my seller clients, is what's your "Plan B?" Meaning; what are you gonna do if it doesn't sell? Stay in it, rent it, let it sit vacant, or worse yet? I do this to force them to consider the fact that it may not sell and to help determine how committed they are to selling. If they don't have to sell, I'll tell them to wait it out until the market rebounds and tips back in their favor. If they're committed to selling, we'll establish an aggressive pricing strategy, matched with an affective stagging plan and this should catch buyers attention and get the job done.
Now this may seem a bit harsh, but it's my job, as a real estate professional, to be truthful and honest with them, so they can make informed decisions about their biggest investment. It's not personal, it's simply interpreting the market and relaying how it impacts them and help them develop an affective plan to get the job done.
Is the Party Over?
In the midst of a correcting market, it's easy to believe the media's overwhelming innundation of "doom and gloom" about the real estate market, saying things like; "the bubble's burts," "the party's over" and "we'll never see times like that again."
The fact of the matter is, real estate has always been and always will be a great investment. Although the days of double digit appreciation and the ability to flip properties for a profit in a short time frame may have slipped away, historically, property values have doubled every 10 years and there's no reason that won't continue into the future.
Supply and demand always takes over and as the U.S. population continues to grow by 1 person every 13 seconds, the demand shows no signs of weakening in the forseeable future. The population growth is fueled by birth rates that are outpacing death rates, combined with increased immigration rates. For example; we grew by 3 million people from from the start of 2006 vs. 2007.
Much like the stock market, real estate values goes up and it goes down, depending on various influences, but it typically maintains an upward trend over the long haul. So TODAY is a great time to buy! Whether you're a first time home buyer or an investor, NOWS the time to get out and take advantage of the many "blue light specials" going on out there.
Although price seems to be the driving force with many buyers today, don't make buying decisions on price alone. With all of the forclosures out there right now, there's a lot of "junk" to sift thru to get the right property at a good value. Unfortunately, many homeowners who've lost their homes in a foreclosure are a little bitter and take it out on the property as they vacate the premesis. We're seeing homes with mechanical issues; appliances, doors, cabinets, trim, carpet, copper plumbing, etc. being stripped from these foreclosed properties, which creates many potential hazzards and hidden expenses.
Now more than ever, you need the expertise of a professional Realtor on your side to ensure proper disclosures are met, appropriate contingencies are place in the offer to protect your interests and to skillfully negotiate the best deal for you.
The fact of the matter is, real estate has always been and always will be a great investment. Although the days of double digit appreciation and the ability to flip properties for a profit in a short time frame may have slipped away, historically, property values have doubled every 10 years and there's no reason that won't continue into the future.
Supply and demand always takes over and as the U.S. population continues to grow by 1 person every 13 seconds, the demand shows no signs of weakening in the forseeable future. The population growth is fueled by birth rates that are outpacing death rates, combined with increased immigration rates. For example; we grew by 3 million people from from the start of 2006 vs. 2007.
Much like the stock market, real estate values goes up and it goes down, depending on various influences, but it typically maintains an upward trend over the long haul. So TODAY is a great time to buy! Whether you're a first time home buyer or an investor, NOWS the time to get out and take advantage of the many "blue light specials" going on out there.
Although price seems to be the driving force with many buyers today, don't make buying decisions on price alone. With all of the forclosures out there right now, there's a lot of "junk" to sift thru to get the right property at a good value. Unfortunately, many homeowners who've lost their homes in a foreclosure are a little bitter and take it out on the property as they vacate the premesis. We're seeing homes with mechanical issues; appliances, doors, cabinets, trim, carpet, copper plumbing, etc. being stripped from these foreclosed properties, which creates many potential hazzards and hidden expenses.
Now more than ever, you need the expertise of a professional Realtor on your side to ensure proper disclosures are met, appropriate contingencies are place in the offer to protect your interests and to skillfully negotiate the best deal for you.
Subscribe to:
Posts (Atom)
