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East Bay Real Estate Focus

Providing Definitive Information for the East Bay Area

By Carl Medford | Agent in Fremont, CA

Price It Right Or Stay Home! (Pricing - Part 2)

The market is down, homes are selling for FAR less than a few years ago, our economy is in the tank and pessimism is everywhere. No news so far. I’ve discovered, however, in the midst of all the depressing news, a group of very optimistic people:

 

Sellers!

 

As a real estate professional, I’ve seen many markets come and go. I’ve seen values yoyo up and down. And I’ve seen a constant through all markets – home sellers being overly optimistic about the price they can get for their home. Although I addressed this issue in my last post, it’s so critical I need to mention it again.

 

In the chart below, you can see the difference between list prices and selling prices for all homes in Fremont, CA for the past 15 months. As you can see, there is quite a difference between the list prices and the actual selling prices.

 

 

This next chart shows the high end of the market in Fremont, CA. As you can see, the higher the value of the homes, the greater the level of optimism!

 

 

I call this “displaced optimism” and it is causing the DOM (Days On Market) statistics to be higher than necessary. Homes ARE selling in Alameda County. There’s been a serious uptick in pending sales. We’re seeing multiple offers every week. However, offers are only coming in on correctly priced homes.

 

It’s good to be optimistic - downright healthy, in fact. However, a solid dose of realty is usually the cure for a home that’s been on the market a while. As REALTORS, we grieve with you at the decline in the market and all its implications. We own homes as well and are being hit like everyone else. But we’re here to help. We provide professional advice to help you set prices correctly the first time so that you don’t lose out as prices erode over the long haul.

 

And PLEASE … don’t fall victim to listing agents who promise artificially high selling prices. They are doing it for one of two reasons:

 

1.   They’ll say anything to get the listing, then hit you up hard for a large price change in the near future or,

 

2.   They are out of touch with the market and truly don’t know realistic pricing. In either case, you really don’t want them to represent you.

 

The last thing you want is to price your home too high and then follow the market down. You’ll lose far more by starting too high than if you’d set the price low to begin with.

 

It’s a fact: Correctly priced homes sell. Overpriced properties do not.

 

There’s another issue here that must be factored into the equation. Lenders hire appraisers to evaluate homes in contract. In the current market, with the new lending guidelines, they’re appraising CONSERVATIVELY, and rightly so. If you receive an offer over market value, the appraisal will more than likely negate the optimistic offering price. You’ll either lose the deal or have to adjust your price down to the appraised price. And with the new FHA loans flooding into the market come much tighter and restrictive appraisal guidelines. BE AWARE.

 

Bottom line: don’t set the price of your property above the market. If it’s priced too high…

 

You’ll be staying at home.


Click Here to see Price It Right Or Pay The Price - Pricing Part 1

Click Here to see When Does A Home For Sale Resemble a Snow Ball In Orbit Around The Sun?

Comments

By Dp2,  Fri Nov 28 2008, 13:36
Nice job.
By Carl Medford,  Fri Jan 9 2009, 07:27
Here are a couple of other posts that may be helpful as well:

Price It Right or Pay The Price! (Part 1)
http://www.trulia.com/blog/carl_medford/2008/11/price_it_right_or_pay_th

When Does A Home For Sale Resemble A Snow Ball In Orbit Around The Sun?
http://www.trulia.com/blog/carl_medford/2008/12/when_does_a_home_for_sal#c6115
By David & Samuel Rifkin,  Tue Apr 2 2013, 07:44
Thank you for this great information.

Samuel Rifkin
The Rifkin Team

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