Is selling a home really all about price? These days, it seems that’s all many real estate agents are telling their clients. One can understand their reasoning, as the appraisal alone will probably kill the deal if the home price is even slightly elevated above anything else that has closed in the last 30 days.
In good markets, it used to be that a home price could be higher than recent sales in the neighborhood, since the market was viewed as an appreciating market. Today, though, even homes that sold 30 days ago may not be enough to support your asking price as appraisers not only continue to view this market as a downward slide, but look with much more scrutiny to the comparables to support the price you and your agent list the home.
However, lowering your price is not the only thing that is going to get your home sold. Remember, home prices in most areas are still falling, which means you may be chasing the market downward as your buyers try to figure out when the best time to buy may be. It is not uncommon these days for home sale reductions to average $25 thousand dollars or more at a time, and, according to a report in the Chicago Tribune regarding home sales in the greater
Also, you must consider the difficulty for most to get the loan to buy your house. Priced at fair market value may not cut it, as the hoops that the buyer needs to jump through to get that loan is probably worth something as well. Essentially, consumer confidence remains extremely low, so the fair market price of the home, less the work it will take for the buyer to get the loan, less the consumer confidence index, equals a major price reduction to get that home sold in today’s real estate market.
Foreclosures and short sales are not helping the general real estate market either. In fact, such sales continue to bring housing prices down even further. If you are unlucky enough to be in an area with high foreclosures, those homes become the best comp to the appraiser looking at the true value of your home. Unless you purchased that home some ten years ago or more, that property going into foreclosure will be sold at a much lower price than the home being sold next door on the general real estate market.
So what’s next? Hopefully the stimulus package expected to be signed by the President on Monday will have a greater impact than critics of the package expect. With a substantial tax credit to anyone purchasing a home in the coming year, and the number of foreclosures and short sales eating up much of the distressed inventory, we just may see a return to normalcy in the next several months.