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Are YOU ˜Chasing the Market Down?
So many Long Beach properties are sitting on the market, no showings, no offers. They were priced at or near market at the time of the listing. Do you know what the current market price of your Long Beach Home is? Or are you ˜chasing the market down?
When you listed your property a CMA (comparable market analysis) was presented to you. Fair market value was established and your price was determined. You priced it at market knowing that market prices have been declining. Several months have passed, you have not reduced your price, do you know what the market price of your Long Beach Home is today?
Let me explain what ˜Chasing the Market Down is.
You priced your home at $650,000 on February 1st, which was market value then.
Between then and April 1st (60 days on market) several homes in your area sell, your market price drops to about $625,000. You do not realize the impact this has on you and are still convinced your property is worth $650k. Your agent has mentioned a price reduction, you have resisted. You really believe your home is worth $650k, after all, it was worth over $700k last summer.
On April 15 you agree to reduce your price to $635k, which seems like a considerable reduction, after all $15k is a lot of money when it is coming out of your pocket. But is it? You are now priced at $635k and the market value is $625k.
You sit for another month, no showings, no offers, what the heck is that agent doing to sell my home? Your agent has mentioned several times that another price reduction is in order, but you JUST reduced it $15k what the heck is going on here?
You finally agree to reduce your price to $625k on May 1st, but another month has gone by since market price was established at $625k. Has your agent showed you the CURRENT market prices? Are you aware that the market dropped another $10k in that month? Market is now $615k and here you are again sitting over market at $625k.
You and your agent go through this dance for several more months until your listing contract finally expires. Market price is now $610k, you are still priced at $625k.
If you had reduced your price on April 1st to $620k or $625k, your property probably would have sold. Instead here you are, 6 months later, no sale and market value is $610k.
You just lost a lot of money.
The scenario I just described is so common it is really sad. This is what is going on in our market. Sellers who are slow to adjust their price to the current market end up losing a lot of money on the sale of their home.
Last summer I watched sellers who did not want to believe, list their homes for what they believed they were worth and ride the market down through 2 listing contracts and still not sell. Some of these sellers lost around $100k in sale price.
The Long Beach real estate market is flooded with properties right now. More inventory than we will be able to sell. There are buyers out looking, but not as many as were anticipated and they are all looking for a deal. Many properties are just not going to sell.
If you ˜need to sell, be smart. Price your home below market value. Offer value! Value is what is selling right now.
˜Chasing the market down is a seriously bad gamble, please do not fall victim to it. This is not the market to speculate in. If you do not need to sell, this is the wrong time for you to be on the market.
If you are in trouble, seek advice from a professional financial advisor. Do not wait until it is too late.
From: Inman News - Tuesday, June 19, 2007 (see article for full details)
California and Florida are expected to dominate a list of areas where a private mortgage insurer expects home prices are the most likely to decline in the next two years.
The markets with the greatest risk of decline share a history of price volatility rapidly rising rates of price appreciation above the long-term average, followed by a recent sharp slowdown in the rate of appreciation, said Mark Milner, PMI Mortgage Insurances chief risk officer.
PMI reports that affordability remains ˜extremely challenged in California after a prolonged period of rapid price appreciation. Current low levels of unemployment continue to support Californias housing market, PMI concluded, but weakening housing demand and prices have resulted in high risk scores.
The 15 MSAs with a greater than 50 percent chance of price declines were:
- Riverside-San Bernardino-Ontario, Calif. (652)
- Phoenix-Mesa-Scottsdale, Ariz. (646)
- Las Vegas-Paradise, Nev. (614)
- West Palm Beach-Boca Raton-Boynton Beach, Fla. (607)
- Los Angeles-Long Beach-Glendale, Calif. (586)
- Santa Ana-Anaheim-Irvine, Calif. (577)
- Oakland-Fremont-Hayward, Calif. (572)
- Orlando-Kissimmee, Fla. (563)
- Sacramento-Arden-Arcade-Roseville, Calif. (560)
- San Diego-Carlsbad-San Marcos, Calif. (555)
- Ft. Lauderdale-Pompano Beach-Deerfield Beach, Fla. (542)
- Miami-Miami Beach-Kendall, Fla. (524)
- Tampa-St. Petersburg-Clearwater, Fla. (506)
- Boston-Quincy, Mass. (501)
- Washington D.C.-Arlington-Alexandria, Va. (500)
Also Read: Chasing the Market Down - Are You Guilty?
http://www.lauriemanny.com/000B0B
Most weeks I find myself scrambling for agents to help hold 6 to 8 open houses each weekend. Each weekend they report back on the traffic, which has been rapidly dwindling to nothingness. Agents do other Realtors open houses to find new business. With no buyers to pick up for new business they are very reluctant to hold the homes open. 
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