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To List or Not To List, That is The Question - 2/10/2008:
People often ask me what time of year is best for listing and marketing a home
for sale. I think nearly everyone agrees that the spring is the strongest market of the year for home sales.
This is largely true because buyers with children and/or sellers with children are trying to coordinate moving with the
end of the school year and summer vacations. They extrapolate backwards from a projected close or move date anticipating
30 - 60 days to closing after accepting a Purchase Agreement offer, and then an additional, minimal market time of 60 - 120
days. That puts a move in mid-June to a listing in mid January.
For the rest of us it probably doesn't matter that much. In fact, for the
past ten years or so the real estate market has statistically stayed strong all year long with intermittent rises and falls
that seem to have more to do with economic or even random factors and less to do with the calendar or the seasons.
Personally, I like to consider the lemonade stand theory. If I were going
to set up a lemonade stand would I just stick it at the end of my driveway? What if there was a garage sale in the next
cul-de-sac over? Wouldn't I want to place my stand there where I would certainly attract more attention and catch more
traffic?
It is for this reason that I believe the best time to list a home in our market
is the week after the super bowl when the Spring Preview Parade of Homes starts in early February. This way I pick up
the family traffic that is already looking PLUS the traffic generated by the literally hundreds of thousands of dollars
being spent by the home builders association on television, radio and print advertising.
Sure, like always you are going to get some tire kickers. And, like always
the first 50 flyers in your brochure box are going to go to the nosey neighbors during the night. That's okay,
one of them may tell someone that they know of a great house for sale. The rest of the traffic is going to be families
with motivation whose homes may already be listed, buyers feeling the spring "itch" to buy, or people whose juices have started
flowing, inspired by the Parade of Homes promotion.
Yes, property values have dropped. That is not going to change for
a long, long time. Truth is, the loss in value that you suffer on the sale
of your home will be the same loss the seller suffers on the home you purchase. It's all relative.
So, if you have been waiting for the right time to move.....the time to start
preparing is now. Open the gifts, pack away the Christmas
stuff, enjoy the game, and then get going!
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The Bubble/Reality Check 101 - 1/12/2008:
Make no mistake about it. For those of you who were in denial of the news
reports throughout 2005 and 2006 ........... there was a bubble. That meaning that property values had become over inflated
due to the number of "qualified" buyers, according to aggressive lending practices, and the lack of home inventory to
support that number of buyers. Remember the stories of the home that was just listed that had three offers on the first
day and sold for $20,000 more than the asking price. You will not likely see that phenomenon again in your lifetime
except in very limited circumstances.
Over the past several years there has been a marked
change in property values in the local real estate market. Hopefully you didn't over inflate the value of your personal
home or other real estate holdings in your own mind or on your net worth statement as many people have. If so, you need
to make that adjustment in your head and in your spreadsheet today. Even worse, I hope you didn't subsidize your
standard of living, as the rate of inflation has outpaced wages during the same period, by taking out a second mortgage
on your home based upon that over inflated value. It is important to keep in mind that the value of your home has
nothing to do with what you paid for it, or your personal feelings about it, or what value you personally attach
to it. It is simply a function of market conditions and what someone is willing to pay which today is far
less than it was several years ago.
In my personal experience as a Realtor I have seen values drop a minimum of 10%
over the past two years. According to the Minnesota Association of Realtors there are currently eight homes
on the market for every one potential buyer. Most experts say that home values will drop an additional 10% before
the market stabilizes. Additionally, for every ten homes that I personally show a potential buyer below $300,000 in
value, four of them are vacant foreclosures.
What this tells me is that if you are a seller you need to accept the reality
of the market and price your home appropriately and make sure that it is in top condition according to the markets definition
of such. For some sellers, top condition means one thing and to other sellers it means something completely
different. If you are unable to compete at a high level of performance with your competition, you need to set your price
accordingly and cut your losses.
The good news is that for those sellers who have a property in an excellent location,
and if that property is in an excellent condition, you will still command the price you are looking for, even in
today's market. Also, the competition is so much stiffer below $500,000 than it is up-market. It seems that there
is not as much price sensitivity to unique, luxury, showcase or vacation homes which many times are paid for with cash.
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For more information on how to prepare your home for sale and how to effectively
compete in today's market please send me a note using the CONTACT page on this site.
