Pricing Your Home in a Buyer's Market

I spoke with a client today, helping him to understand the best way to price his home in the current market. My goal was to retool his thinking. His original thought was if we priced his home about 5% over market value, a potential buyer would come along and naturally negotiate down to a number that he, the seller would be willing to accept. In the past, this was an approach that worked. It wasn't rocket science. Naturally, most people want to "feel" like they're getting a deal. Today, things are different and hoping that someone will be interested enough to make an offer cannot be depended upon. Basically, "hope" is not a strategy. Homes are sitting on the market longer than in times past and the longer a house sits on the market, the more likely it will become "stigmatized" even thought there is nothing materially wrong with it. Ultimately, this can be the kiss of death for a property. Needless to say, this is not a dependable plan.

Today calls for a new a different strategy. An old action that still applies would be to have your home's interior and exterior "freshened up" and professionally staged. Additionally, I would suggest having a pre-listing inspection performed. This is an investment on your part, but it can help to give you more control during the negotiations during the option period, after your Buyer has had THEIR inspection performed. You see for every dollar of repair needed, the Buyer will typically ask 3-4X that amount. The reason for this is caused by Buyer's remorse, a natural thought process the Buyer is experiencing.

Lastly, in order to regain some control in what seems to be an uncontrollable situation for a Seller, I suggest you and your Realtor price your home AHEAD of the market. By doing so, your home will stand out amongst the competition and sell quicker and for more money. This will take some of the control out of the Buyer's hands and put it right back into yours.

It works beautifully. This week, after listing a home for a Seller with just this approach, the property went under contract for full price, in a multiple offer situation! We also have a back up offer in place, should the first position contract fall off. As you can imagine, the Seller is very happy they listened and put their trust into the hands of a full service professional.

Interest rates

Some relief seems to be on the way for those buying and selling homes this month. In general, interest rates are falling to all time lows. I think I heard 4.75% (fixed) for a 30 year conventional loan today. I say, wow! One of my lenders is even offering a credit for the loan processing fee she charges at the close of escrow for any new loans this month.


Now might be the time to take a look and see what you're currently paying in interest and you may want to consider re-financing right now. What a wonderful Christmas gift to your pocket book! It's also a wonderful time to make a move. I know, you think I'm crazy, but hear me out. Because so many people distracted by the holidays, now would be an excellent time to jump off that fence and take advantage of the low prices and rates. Even selling in these times can be quite strategic. What do you mean you ask? Well, although the market is soft and top dollar for you existing home is unlikely, you have an wonderful opportunity making your money on the purchase of your next home at a great price. Additionally, because of the present time of the year, there will be less competition for the marketing and sale of your existing home. Now do you see what I mean? You can be a successful investor in any type of market, you just need to shift your thinking.

I'd be happy to discuss this or any other real estate ideas and strategies with you. Feel free to call or email me.

Meeting with Gary Keller

I had the priveledge yesterday morning to hear Gary Keller of Keller Williams Realty International speak about the shifting real estate market and it's recent effects. If there is one thing that I came away that I would call the "nugget" is the fact that right now is an execellent time to be a buyer. Interest rates are on the way down and money is again becoming more available. Austin is still one of the most affordable places to live. I personally can attest to this as I have just returned from a trip to San Jose, CA, where the median priced home is still hovering in the high $500K's. I'm talking about a 3 bed/2 bath 1500 sf 40 year old home. Not much of a match to what we have here which is newer, nicer with greater amenties.

What I hear most these days are Buyers who want to wait until prices bottom before jumping off the fence. The question is, where is the bottom or jumping off point? Do you know, I certainly don't and anyone who says that they do is sadly mistaken. The truth is nobody knows.

With that said, when the market does turn back upwards, it will happen quicker than you can shake a stick and you will have missed a great opportunity. How long will interest rates be this low? Another good question...nobody knows. One thing I do know...real estate is a better investment than any "paper" (stocks, bonds, etc.) you might buy. Historically, in Austin property values have doubled in value every 10 years or so. Not bad odds....