Counter Intuitive Home Selling. Even if you were not in the the housing market last year you are probably aware of the crazy spring market and the price appreciation that resulted. The super low Orange County housing inventory along with all-time record low interest rates were to blame. In January 2013 the housing inventory for all Orange County was at a fifteen-year low. The year started with around 3600 homes for sale in the whole county. Distressed property sales had shrunk from 30 to 60 percent of the market to 2 percent. The result was multiple offers on just about anything coming on the market. Year-over-year price appreciation was at 15 to 20 percent when the interest rates started going up in June. The second half of the year was another story. Investors disappeared and buyers had to adjust their thinking and recalculate what they could afford at the new rates.
It was like the bus driver slammed on the breaks and expectations went flying. In October the rates dropped a bit and buyers seemed to be out again but this time the buyers were looking for value and definitely did not want to pay over market value. We are now in a “normal market”. Now that we are in a more normal market sellers need to get a grasp on reality. Besides the climbing interest rates in the second half of the year, what contributed most to the drop in pending properties and sales was overpriced listings. Of course, no seller wants a to leave money on the table, but there is a principle that always applies in normal markets but may seem counter intuitive at first. The closer you price the home to “real market value” the higher the selling price will be. But sellers will say, “I want to have room to negotiate.” Yes, but if you have no offers in hand there is no one to negotiate with. If you think about it an overpriced listing will linger on the market and eventually the price will have to be reduced one or multiple times. One would think that when the price is reduced to real market value the home would sell. Guess again. Buyers will still wonder why your home has not sold and look at the long market time and offer even lower than real market value. If your home is priced at real market value from the first day buyers will recognize that and make offers at full price or very close. With the vast amount of information on the internet today buyers are better educated than ever. Plus in a “normal” market buyers have seen literally every home on the market which makes them very savvy consumers, especially so in Laguna Niguel and Dana Point.
This is not a Realtor Trick. This is market economics and has been proven over and over again. Think about it. Call or email for a FREE 2014 real estate forecast.
Ron Buck, Keller Williams Realty 949-456-0505
JonRonRealEstate.com email Report@JonRonRealEstate.com
Ron has been a Realtor for 17 years and has sold hundreds of home in two states as well as REO’s and short sales.