UNDERSTANDING TODAY’S REAL ESTATE MARKET AND TODAY’S BUYER

Some areas have fared better than others during this period of price adjustment. But even in areas where that have fared better, prices may have dropped.

We all hope for a bottom of the downward trend in price. When will that happen? Nobody knows for sure. But when it does stabilize, appreciation rates will not return to the heights that were achieved during the “up market” period.
 

Even during a “down market period”, homes will sell if priced properly.

Buyers today know that they are in a much better position than in previous years. In most cases buyers are going to be aggressive when making offers. That does not mean sellers should reject these types of offers outright. Many buyers will test the waters to judge how desperate a seller may be. Be prepared to make a counter offer. It may take several of these counter offers to make a sale work. Yes, the seller is coming down in price with each counter offer, but the buyer is increasing their price at the same time.

Buyers may also ask sellers to pay all or part of their closing costs. If a seller does enter into a contract, they should be prepared for the buyer’s physical inspection and request that repairs be completed before the close of escrow. This is another time for negotiations. Don’t let a sale fall through for a few and most likely inexpensive repairs. These repairs should have been completed before the home was listed for sale.

Strong buyers today will not make an offer contingent on the sale of another property. They will be pre-approved for financing. They are prepared. Are you?

PRICING AND PREPARING YOUR HOME FOR SALE.

Is your home the only home in the state of California that has increased in price since 2005? Well, there still many sellers that actually believe so. Over pricing your property in a down market is the “kiss of death”. If it is severely over priced, you may not recover. In other words, it will not sell. It will become “stale” and it will become forgotten by brokers and buyers. Don’t make this mistake. It is ok price a little high, but be realistic. The market will “talk” to you and let you know how your asking price is being received.

The only way to properly price a property today is to have a knowledgeable broker. He or she can easily show you comparable homes in your area that have sold recently. These are the same homes an appraiser is going to use when appraising your home for a buyer’s lender.

Many sellers today look at the median prices in their area and try to extrapolate a value for their home. Using median prices as a gage for your home is not recommended. If the median price goes up, it does not necessarily mean the value of a home has gone up. It could, but it could also mean the value has gone down. Median prices are usually only a useable factor if looked at over an extended period of time-usually years.

Many online resources such as Zillow are used by sellers today. This is not recommended. It may be fun, but in most cases it will be misleading. When one types in their address, a property will come up with a base price. The user then can make adjustments, such as showing a remodeled kitchen. The problem is that this base price is most likely inaccurate. How is this base priced arrived at? I don’t think anyone knows. So if you start with a base price that is inaccurate, then any adjustments one makes is still not going to make it anymore accurate. Again a good broker will be able to show you comparable sales that the buyer’s appraiser is going to use when appraising your home. The appraiser is always the one that ultimately decides the value of your home. Just because a seller and a buyer agree on a price, does not make it the final price unless the appraiser agrees.

Sellers today must make their homes shine and sparkle like a jewel before it is entered on the mls for sale. You hear it all time and it is true-first impressions do count. In fact they are paramount. If a buyer walks into your home and can visually see that your home is in a move-in condition or close to it, you are two thirds of the way to a sale.

What is meant by move-in condition? The home does not need paint inside and out. The carpet is in good condition. There are no noticeable repairs that need attention.  All of the screens are in place. Light switches work. The yard looks fantastic. The minute a buyer pulls up front, there is anticipation. Some sellers have the attitude that “all of this is not important, I will just wait to get an offer and then negotiate”. Those sellers may never get that offer.

A seller today really has to put their best foot forward. This is not like the old days. If a home is priced right and it has been prepared for sale, it has a very good chance to sell.

WHO TO CHOOSE WHEN LISTING YOUR PROPERTY

Many sellers today have been conditioned to list with a friend, a neighbor that has a license or feel they must list with an “expert” for their area.  A friend can be dangerous to your friendship. And a licensed neighbor can be dangerous to your friendly neighborhood. Many feel that an “expert” is the thing to do. What you really have to do, is just choose the right agent or broker. But don’t be afraid of choosing an agent that does not reside in the area or have an office nearby. Many agents and brokers are now developing new business models that allow them to operate county wide. They have just as much information as does the “expert” for the area. In many cases these outside agents can offer reduced commissions and other concessions. If money is not important to you, then maybe you might consider not selling. If there was ever a time that ever dollar counts it is now. Take advantage of it.

Once your home is listed, make sure the listing agents sends you a link that will show you exactly how your home appears on the mls. It is important to look at all of the information for accuracy. Especially look at the photos. Photos on the mls are the first thing that buyers look at. If they are good, they will keep looking. The San Diego mls allows 12 photos. Make sure there are 12 photos. When buyers look at a listing and there are only 1 photo, they will usually move on. There are agents that do not include any photos. That is a guarantee that buyers will think immediately there is something wrong with the home and disregard it.

If you are thinking about selling your home today, but fear it may not be the best time, well, maybe it is not. However if you have purchased your home prior to 2005, you most likely have equity. Yes it is true that maybe your homes value has dropped from its high, but that area you have always to move into has also dropped in price as well. So you may not get as much for your home as 2005, but you may have the opportunity to buy the replacement home at a reduced price.

If an agent offers to sell your property at a reduced commission seriously consider it.  Some may not be giving you the service and support that you need.  On the other hand more and more brokers and agents are adjusting to the changing real estate industry. They are developing new business models that can allow them to give you the support, service and knowledge you deserve. In fact if you are paying a 5% or 6% commission, you are paying too much. In the days when the market was rising by leaps and bounds, many sellers didn’t seem to mind giving away a large chuck of their equity for commissions. But today every dollar counts.

Don’t let an agent or broker tell you high commissions sell properties faster. They don’t. Buyers are concerned with only one thing. And that is finding their dream home. They are really not concerned how much of a commission their broker is receiving when being represented by them. Agents and brokers will jump at a chance to sell your home as long as they are receiving 2% or higher. Buyers today have access to the mls. They know already know what is on the market and in most cases they direct their agents on what home they want to see. I can almost guarantee you they do not ask their agent how much of a commission that agent will receive.

Sellers, this is a new era for the real estate industry. The internet has and is continuing to change the way real estate is purchased and sold. Unfortunately there are many agents and brokers that don’t want to embrace that change. The changes being made today benefit both buyer and seller. And that is the way it should be. Take advantage of the changes. You will benefit.