More than five years of a housing depression have taught us to adjust, adapt, and learn new dynamics of selling in a declining market. This greatest of challenges has brought us back to the very fundamentals of our trade, selling real estate in the public marketplace.
At the core, beneath all the novel ideas of marketing, technologies, advertising, and sales strategies, there are three absolutes to selling your property- Price, Location, and Condition. Apply these properly and most of the work is done. The rest of the glitter is just about improving competitive advantages. There can be other dynamics that play a heightened role for a time. For a time such as this, I add a 4th dynamic which has played loudly for the past 5 years- Sometimes there are no buyers in a particular market.
1. Price Can Sell Anything, Anytime!
Nothing is as important as pricing the property right. Regardless of the condition of the property, market conditions, or location issues, price can be adjusted to compensate and sell any home in a reasonable time. The banks prove this everyday by selling a high volume of foreclosed properties quickly (accepted offer within 30 days). Banks cannot afford to keep these homes on their books so buyers often get the property at more than 15% under current market pricing. The bottom line is that pricing, appropriate to the goal, works even when other efforts do not.
Buyers today have almost all market knowledge at their finger tips and they are savvy about good values, deals, steals, and overpriced properties. If you list your $200,000 property with me today for $50,000 I will have a cash offer for you in a few hours! List it at $215,000 and it will sit there waiting for a price reduction; at $235,000 you are wasting your time; it will not sell no matter what you want or what a Realtor® promises you. No one controls the marketplace! No one can change it! No one violates its realities and gets rewarded for it. If your property sits on the market without showings or offers for too long, it is overpriced, at least as it is right now.
Of course most people do not want to unload their property like banks do; they want to sell it at fair market value. Only recent sold properties reveal what market value really is. Actively listed comparable properties on the market are nothing more than opinions of value by agents (sometimes flawed) or the dreams of owners (sometimes unrealistic). These prices may change often and dramatically until they reach true market value and sell. Active listings should be viewed only to evaluate your competitive position to gain a buyer who might be in the market place. To get a better price, the following principles apply…
2. Location Is The Standard for Real Estate Value:
Location, location, location has always been the key to establishing value and sale-ability in the marketplace. Location is about ‘local’ issues right down to the very home’s neighborhood, location, and setting. If you are where people want to be, for whatever reasons, you will sell it for more money and quicker. Right now urban living is in vogue, is green, is less expensive for commuting, and is convenient to restaurants and great shopping, etc. Guess what? The Pearl District in Portland is expensive and yet it sells well! Walking distance to McMinnville’s down town or convenience to a select school gets a better price. A quiet cul-de-sac sells easier than a home on a busy feeder street. Highway visibility for a commercial space is more expensive than on secondary streets even if the buildings are more attractive. On the other hand a home next to the highway is in trouble in the same way that a home near airport noise suffers. You will have greater challenges on a gravel road, in areas with no cell reception, next door to a dilapidated home, or near a smelly business. These are difficult to sell; therefore, the property has to adjust pricing to move it.
3. The Property Condition Can Get a Quicker Sale and a Better Price!
Home “flippers” want a fixer-upper but they also require the low price which goes with it. Perfectly manicured, hardly lived in, designer homes sell quicker and get a much higher price. Most people want a turn-key home that needs only cosmetic customization based on the buyer’s preferences. People hate repairs, especially the repairs that are not enjoyable expenditures such as plumbing and electrical fixes, crawlspace issues, roof and gutters, replacement windows, water heater, cracked concrete, exterior painting, etc.
It has been a ruthless buyers’ market with great demands made on sellers for the price and then again after the inspection. Prepare your home for sale by completing projects, making all known repairs, and updating whatever you are able to do, touching up paint, etc. Anything sub-standard about your property will require a price offset to get it sold. You can sell a home in any condition but the more challenges, the less money you get. We can help you think through this complex issue.
Presentation is crucial in a competitive market. You do not sell your home in the same condition you living in it. Home and Garden TV has helped Realtors® greatly. These real estate reality shows help buyers to see the competitive process and learn basic principles of property presentation. De-clutter and de-personalize have become the most well known. Sparse and space is good. We also want buyers to imagine themselves in the house not think of it as your home. Remember, in the housing industry, like the clothing and the auto industries, the styles change more often than ever right now. Home Depot and Lowes, specialty stores for flooring, tile, paint, light fixtures, etc. mean that people can remodel and re-decorate frequently. Buyers pay most for homes which are not dated.
Consider a pre-listing inspection to be able to eliminate repair obstacles. Think about staging your home for sale. If it gets you a quicker offer and a higher price negotiated, your efforts are worth money in your pocket.
4. Sometimes, There are No Buyers in the Marketplace. This is the exception…
For 5 years, we have suffered insecurity and uncertainly (never good for marketplaces), outright paralysis (financial meltdown of 2008); inability to get financing (new construction for lots and land), a log-jam of unsalable homes (frustrating the ability to move), and a glut of distressed properties systematically reducing home values (and de-motivating buyers because, ‘Next year the price will be even lower!’).
For much of this time there were no buyers for city lots and rural buildable properties. While luxury and complex rural properties were losing 50% of their value, there were no jumbo loans and no buyers. Unemployment sucked an enormous number of prospective buyers out of the marketplace for the mid-range homes. Distressed markets in California, Arizona, and Nevada cut off the normally vibrant flow from out of state buyers affecting rural areas like Yamhill County’s wine region severely. Grass seed farms, normally a strength of our local economy, were a liability as seed prices crashed. In the same way timber properties crash when the lumber sales dive for lack of demand.
It is challenging to incentivize buyers when they cannot be found! This has been our greatest challenge in selling. To some degree we had to hit bottom to first attract the scavengers to clean-up the carnage and then the public to believe that the downside risk of buying today is low and the upside potential is great. Things are changing now and we have sales now providing the reason to believe we have hit the bottom and the buyers are coming back.