For Love or Money

July 4th, 2009 · No Comments

There are as many approaches to what it takes to sell a listing in today’s market as there are listing agents and sellers. For most of the last couple of years, something on the order of 90% of the listings that went on the market didn’t sell, and neither agents or sellers knew at first what to make of it, and later, what to do about it. This may sound like a criticism, but in fact, it’s just an observation that we have been in a period of “price discovery” resulting from major changes to the lending market that drives buyer activity.

As agents, we suggest prices to our seller clients relative to comparable sales, and failing that, relative to other homes on the market. However, FINDING a comparable sale - a TRULY comparable sale - was the challenge for the last few months of 2007, and most of 2008, even heading into 2009.

But over this period, some homes have sold. Foreclosures, short sales and builder liquidations have led the market in a downward direction. “Regular” sellers have also had to adjust their prices downward, to compete. So it seemed we were in freefall for a while there.

That’s where the laws of economics appear to be kicking in. One of the most basic laws of economics is the law of supply and demand. That law says that in a competitive market, price acts as the equalizer between supply and demand. Too much supply means prices come down, too little means they go up. When they come down enough, demand increases, stabilizing the market.

Finally, it seems that price reductions over the last couple of years seem to be combining with other incentives (such as still historically low interest rates, and the first time buyer tax credit) resulting in more buyer activity. The last couple of months of pending sales numbers are up over 2008, even if prices are lower.

So, things are starting to stabilize, and we are now getting used to “the new normal.”

At the micro level, agents and their clients now seem to be falling into two camps in regards to what it takes to sell a listing. Just like they always have!

One camp believes that it’s all about the money. “Price is king.” These folks think price is literally ALL that matters, and you can tell when you walk into these listings because although the price is low, you can tell that no effort has been spared to make the place seem as unlikeable as possible. I would go so far as to say some of these listings are downright scary. From caved-in ceilings, to dog doo on the carpet, and rats in the toilet - I have seen it all! (Okay, these are extreme examples, I admit).

I often think that there are some homes you would be challenged to give away.

The other camp thinks that love is all you need. To these folks, staging, preparation and marketing still make all the difference. In fact, some folks in this camp believe those things make so much of a difference that they are still pricing those listings like it was Spring of 2007, or based on what the seller owes (from their 2007 refi).

These listings will never sell either because the elements are not in balance - these places may look great but you can’t ignore the price element.

Fundamentally, both camps have it half-right. Price needs to be set attractively, and in keeping with comparable sales in the area. And if your area has few comparable sales it may take some work to figure out what it’s going to take to attract a buyer.

But, that is just the first step. Buyers have a lot to choose from, even if most of that inventory seems to be priced relative to other listings on the market rather than relative to actual sales. (Sales are the more reliable indicator of likely price than people who are on the market and have failed to sell).

And since there is a lot to choose from, it takes a well-prepared listing to be the one that buyers will choose.

It is true that staging still makes a difference. Love may not conquer all, but it will definitely work in your favor as a seller if you can make a buyer fall in love with your home. However, all the staging and marketing in the world won’t matter if buyers don’t see the value, and don’t come to look at the listing. Price and value, along with the right kinds of marketing, are what will get the buyer in the door. Staging and careful preparation are what give your home the appearance of being the best value of all the choices in a buyer’s price range, and helping them mentally move into, or fall in love, with a home. When other factors are equal, staging makes your home the one buyers choose.

I heard it put very well recently - we are in a price war AND a beauty contest. You have to win both to be the house that gets the offer.

About the Author: Sandy Kaduce is Associate Broker of Gallery Homes Real Estate. She serves buyers and sellers in North King and South Snohomish counties. She is 2009 Board President of the Mukilteo Chamber of Commerce, as well as Vice President of Site Selection for Habitat for Humanity of Snohomish County. For more information, visit Sandy on the web at www.sandykaduce.com! Read more from this author