I opened a fantastic bottle of Chardonnay the other night and marveled at the description written on the bottle – pale gold color with delicate overtones of bananas, peaches and pineapple, a soft balanced wine with classic New World tropical fruit flavors. Really? All I know is that I liked it! I always marvel at the sommeliers who can actually discern the nuances of flavor contained in the nectar of the gods. In many ways, the real-estate market is much like a bottle of fine wine right now, full of complexity, and the Realtors are the sommeliers.
When Art became a licensed realtor in 1986, housing prices were at a record high for that time. In 1993, when I became licensed, the recession hit and interest rates rose to 14%. Homes stayed on the market for a long time and prices were commonly reduced a few times before selling at an average price of $250,000-300,000 for a traditional home in a desirable neighborhood in Culver City. As we know, the huge boom hit and most listings, even the not-so-great ones, sold within weeks with multiple offers, often above asking price.
Currently, the market is unlike any we’ve seen. There are so many variables at play that setting an asking price, negotiating an offer, and eventually agreeing on a price to make a deal are really determined on a case-by-case basis with very little precedent. In a market like today’s you can’t take the list price at face value.
For example, if you are looking to put your house on the market some of the complexities you must consider are:
1. Short sales. These can either be priced high to account for what the seller actually owes, or priced low to attract multiple offers knowing that the bank will cause up to 6 months of delay and then potentially counter the price of the offer accepted by seller.
2. REOs. These are lender-owned properties as result of foreclosure and are typically priced lower than market value, to account for the fact that they are usually fixer-uppers, sold “as is” with no record of the property’s history/disclosures, and typically unfriendly to buyers’ requests for credits/repairs.
3. Distressed Property due to Foreclosure or Deferred Maintenance.
4. Condition of your property and those around you.
5. Specific desirablity of that particular neighborhood or area.
6. The property is based on MLS area code 28, which takes in unincorporated areas of Culver City actually located in Los Angeles, versus Culver City proper and enjoying Culver City schools and services.
7. The strategic pricing styles of individual listing agents: some agents will list a property well below market value to attract a multiple offer situation and/or a bidding war & quick sale, some will list the property over market value, knowing that a reduction or negotiation of price will result.
8. The motivation and situation of the seller.
9. Other options for prospective buyers at that time and in that price range. i.e. supply vs. demand.
As you can see, there are so many factors at play here you really need to consult with a Realtor to know how to price your house to sell, or how to be the strongest candidate when making an offer on a home. Make sure the Realtor you work with is local, intimately familiar with their particular micro-market, and can account for the various factors mentioned above, as well as others.
So read the label yourself, but remember to consult the sommelier before you commit to opening the bottle!
For information on pricing your property or strategizing how to purchase the best home at the best price, we provide a free market analysis targeted toward your particular situation. We look forward to meeting with you, hearing your thoughts and offering our experience to assist in the best outcome for you. Contact us with all of your real estate questions and needs: firstname.lastname@example.org or direct via text/call 310-259-7419. You can also visit our website at www.heartrealtors.com or on Facebook at Heart Realtors.