Chasing the Market Down - Are You Guilty?
18 comments »Are you “Chasing the Market Down”?
Before
your Long Beach home was listed you reviewed your neighborhood comparables,
current market conditions and the location and condition of your home
with your Long Beach REALTOR®; then determined your listing price of $750,000.
You were aware that prices in most markets nationwide have been
declining and that declining prices would necessitate price reductions,
if your home didnt sell in a timely manner. Your REALTOR® explained
that not reducing your price could cause you to chase the market down.
Your home is placed on the MLS, is advertised in the local paper, is
placed on many important Internet real estate listing sites, lovely
fliers have been placed in your home and the sign is up in your front
yard. Several showings occur the first week, a few the second, one
buyer comes through with their agent the third week. Whats up with
this? Why are so few buyers coming to see my beautiful home? Calling
the REALTOR® to have a little chat with them and find out what is wrong.
Shortly after your home went onto the MLS the Long Beach real estate market took a steep decline. A consultation with your REALTOR® revealed two new comparable listings in your community priced well below your current list price at $725,000 and $705,000. At about the same time a couple of other comparable homes for sale, in your neighborhood, had reduced their listing prices to $720,000 & $710,000. You were now priced high on the market at $750,000, on the market for 21 days and your REALTOR® says, in need of a large price reduction.
While you knew that you would likely have to reduce your price you
didnt think that a $50,000 price reduction would be in order just 21
days after placing your home on the market; you resist and only agree
to a $25,000 price reduction, after all that is a lot of money out of
your pocket - right? You are now sitting on the market in your area at
$725,000. Your competition is priced at:
- $705,000
- $710,000
- $720,000
- $725,000
You are now one of the two highest prices in your neighborhood,
congratulations! Are you surprised when two weeks go by and only two
buyers are interested in viewing your home?
Your REALTOR® calls you and tells you just what you have been
waiting to hear, an offer has been received, when can they come by to
discuss it? Excited you inquire “How Much did they Offer?” Your blood
begins to boil when you are informed that the buyer has offered
$675,000 and has requested 3% in closing costs, your 2 large plasma TVs
and the dining room furniture which cost you a small fortune.
Bellowing into the phone you instruct your REALTOR® not to bother
coming over - just decline the offer. You do not want to hear about a
counter offer, this buyer is trying to rob you and is clearly out of
their mind if they think they can buy a home in your neighborhood for
that price! The gall of that buyer!
The home currently listed at $705,000 accepts their offer and closes
escrow 30 days later. You are still sitting on the market at $725,000
and are no longer receiving showings. The neighbors are getting
nervous watching prices drop so quickly and 3 more homes in your
neighborhood come onto the market - two of them just down the block
from your home. The 3 homes that were on the market at $710, $720 and
$725 have reduced their prices and you follow suit reducing your price
to $710. The competition?
- $675,000
- $679,000
- $689,000
- $699,000
- $705,000
- $710,000
Congratulations you are still sitting at the top of the heap! You
really needed to take a big leap, but you just could not wrap yourself
around it. Your wife is starting to put the heat on you to get the
house sold, you need to move soon; your life is getting very
complicated. Calling the damned REALTOR®! What exactly is that
REALTOR® doing to drive buyer traffic to my home?
Two more homes in your area sell. The $675 home sells for $660.
The $679 home sells for $655. Doesnt make sense! Nothing makes sense
anymore-what the heck is going on? How could prices drop by almost
$100,000 in such a short time?
Two more homes in your neighborhood come onto the market, your wife
is driving you crazy, you reduce your price to $660,000 in a desperate
effort to sell and get the monkey off of your back. Stupid REALTOR®!
The competition?
- $659,000
- $660,000
- $675,000
- $699,000
- $705,000
- $710,000
An offer comes in at $655,000. They want 3% in closing costs and
the damned plasma TVs (whats with the damned plasma TVs anyway?!?)
You tell the REALTOR® to get to your house as fast as possible and
accept the offer as written. Your wife is standing behind you with a
bat at this point!
You just learned what it means to be guilty of “Chasing the Market Down”. Had you taken the leap earlier your home would have sold faster and you would have netted much more profit.
Chasing the Market Down is a very serious situation in todays real
estate market. Many sellers are doing this across the nation. The
clear majority of them never sell. The expired, cancelled and
withdrawn listings on the MLS reflect far more properties than the
Solds do. Unless you actually need to sell your home this is not the
time to be on the market.
If your Long Beach home is currently on the market or if you are thinking of placing your home onto the Long Beach Real Estate market:
- consider the comparables carefully - get ahead of them
- review them weekly with your REALTOR® - stay ahead of them
- adjust your price to remain competitive - dont play games
- dont kid yourself about the actual value of your home - its worth what a buyer will pay
- dont be the next seller guilty of “Chasing the Market Down”.
If you suspect that you are Chasing Down the Market give your Realtor a call today.
Have to go deal with an offer……….
Laurie Manny
Long Beach Realtor®
Prudential California Realty 3728 Atlantic Avenue Long Beach, CA 90807
(562) 212-5420
Long Beach CA Real Estate
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http://www.lauriemanny.com/001B9C
· http://www.realestatevirginiabeachhomes.comLaurie, this is priceless.
Permalink 2008-02-02 @ 10.11:24 pm · http://www.lauriemanny.com/Dennis, I thought so too!
Permalink 2008-02-02 @ 10.35:25 pm · http://beachcityrealestateinfo.blogspot.comLaurie,
Absolutely the best explanation I have ever seen on chasing the market down. This post should be mandatory reading for sellers and their agents.
Permalink 2008-02-02 @ 11.20:55 pm · http://nmhomesonline.comPermalink 2008-02-03 @ 12.20:30 am · http://www.lauriemanny.com/Kaye, Thank you I agree
Albuquerque Realtor, It is not a good time to sell. Only those who absolutely have to sell should be on the market now and they should be on the market "Priced to Sell".
Permalink 2008-02-03 @ 12.47:49 am · http://AnnArborRealEstateTalk.comLaurie, this is fantastic. I spent all day yesterday getting price reductions on houses that were clearly chasing the market down. That is the very words I used. Funny, about the plasma TV.
I have found CMA's done 3 months ago and no longer valid, we have to update constantly. I am pricing my listings now on the active ones, NOT the sold ones. They are irrelevant if you can't get a showing.
Permalink 2008-02-03 @ 10.57:32 am · http://www.lauriemanny.com/Hi Missy,
For some reason everytime I receive an offer on a home that has a big screen plazma TV the buyer is requesting that it be included in the deal. I understand why they want the TV's, but it just struck my funny bone.
It's interesting about using the actives to price a property. Pricing is a delicate balancing act these days, the only way to inspire buyers to view a property is to make the price irrisistable, which means lower than existing homes on the market.
Permalink 2008-02-03 @ 2.32:29 pm · http://fundys.comYou are right on. I was lucky and sold my Long Beach house in August 2007 the way you suggested. It sold with 0 days on the market. I spent $100,00 to replace everything in the house to make it move in ready. Then I priced it below market at $699K.
I took the first offer I received at $689, and now am living in Spring Green Wisconsin by the Wisconsin River in the same size house, but with 2 acres of land. My WI house cost me $155K by the way. And if I was any happier, I’d have to be twins.
I just talked to my realtor in California yesterday, and she informed me that if I was to sell that same house today, I would be lucky to get $600K.
Lesson for people to learn. Greed is NOT good.
Bye from the best place to live in the US, Spring Green, WI.
Donovan
Permalink 2008-02-03 @ 11.33:19 pm · http://www.lauriemanny.com/Hi Donovan,
Thanks for stopping by and sharing your story. You were very lucky that you were able to sell when you did. I often wonder if anybody thought that home prices would drop as much as they have, as rapidly as they have.
Ahhh, you call it greed. I like people that call a spade a spade. It is part greed, part denial. Many sellers just don't want to believe and have convinced themselves that their home is really worth more for a variety of irrelevant reasons. Sometimes we can get through to them, sometimes we can't. We save the ones we can.
Glad to hear you are happy in your new diggs, they sound fabu! A lttle too cold for me up that way.
Best of luck in your new home, I hope you make many happy memories in it.
Permalink 2008-02-04 @ 1.30:05 am · http://www.reesespiecesofrealestate.comVery well written, and timely.
Permalink 2008-02-04 @ 11.14:08 am · http://www.lauriemanny.com/Elaine,
As Realtors we see the effects of chasing the market dailly. Consumers read the news - we all know how reliable that is. It is difficult for sellers to wrap themselves around the declining values and accept the reality of what their home is likely to sell for.
I wish we had magic......
Permalink 2008-02-04 @ 12.30:14 pm · http://www.ExpiredPlus.comGreat insight, Laurie.
"don't kid yourself about the actual value of your home - it's worth what a buyer will pay" - sooo true!
I would add "and what the lender thinks it's worth".
Permalink 2008-02-04 @ 2.32:46 pm · http://www.lauriemanny.com/Borino,
Yes, it's worth what a buyer will pay - and not a penny more and yes, IF the lender/appraiser agrees. Appraisers are hired by and answer to the lender, they are finding themselves having to adjust for the declining market as well.
Permalink 2008-02-04 @ 2.40:58 pm · http://www.pdxmojo.comGreat article!
I need to show it to my seller who is on the verge of foreclosure, has a ton of unfinished projects to do on his house, but still wants 10 percent more than the house is worth. *sigh* It will take a few lowball offers to make him see the light.
Permalink 2008-02-15 @ 11.59:08 am · http://www.lauriemanny.com/Hi Jody,
It is unfortunate that so many sellers do not want to see the truth of today's market and the actual value of their homes. They hold out for so long, so badly wanting to believe, that they lose tremendous amounts of potential profit often resulting in short sales or foreclosures. I wish there were magic words but we can only tell them the truth, we cannot make them believe.
Sometimes even a few lowball offers doesn't get them there. Perhaps THIS is the message the media should be spreading.
PRICE IT RIGHT!
CHECK THE COMPS WEEKLY!
ADJUST YOUR PRICE!
Permalink 2008-02-15 @ 1.23:21 pm · http://www.realestateforthesoul.com
Laurie,
THis is another excellent article by you. This is so important information to get out to homeowners. You re a great source for the always first with current market are always the first source of current market information.
Permalink 2008-03-19 @ 8.41:26 pm Laurie, I thoroughly enjoyed every second of this article. Recently my very own sister and brother-in-law were stubborn sellers, even given their Realtors® expert advice ;) They learned the hard way here in Chicago too..
If they would have only listened to me the first time, they could have netted a lot more at the closing. I guess if you can’t convince family… it’s even harder to convince a stranger.
Great and informative article which is a great read for any seller!
Permalink 2008-04-29 @ 7.49:38 pm · http://www.longbeachrealestatehome.comPermalink 2008-04-30 @ 6.27:55 amThis post has no comments awaiting moderation.
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