Real Estate Blog for Palo Alto, Mountain View, California, and Surrounding Communities
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August 2006
• Aug. 11, 2006 - Selling Houses is a Numbers Game
Well, the news is out! The market has started to slow down. We are blessed in this area that the impact has been minimal compared to other areas. Starter homes are still very much in demand, although even those are taking a bit longer, on average, to sell. Pricier homes are definitely sitting on the market longer (as much as 9-12 months in some peninsula areas) and price reductions are not uncommon.
So, what does it take to sell a house? Well, there is a long answer and a short answer. I will skip the long answer here, except to say that it almost always takes a lot of hard work. The short answer is summed up in two words, price and exposure. Price is obvious. An overpriced house may not sell, even in the most heated markets. But once the market softens and buyers begin to realize they might not have to compete for the house they want, they will look long and hard at the price. It has to be reasonable or they will pass. (Also, even if a high priced house sells, it may not appraise at the purchase price.)
Exposure is another story. The more buyers are exposed to your house, the more likely it is to sell. And there is so much to choose from in the way of advertising! There is the traditional ad in the newspaper, there are websites, too numerous to mention, and there is the Multiple Listing Service used by professional real estate agents. Historically the MLS was used so agents could advertise their listings specifically to other agents. This system was a “win-win” for everybody. There may be thousands of buyers out there, but many of them relied entirely on their agent to find homes for them to look at. Naturally, the more agents who knew about your own listing, the more likely it was to sell (… the numbers game.) Advertising in the newspaper might bring some other buyers who had not yet associated with an agent, but that was just the tip of the iceberg, and an agent who relied exclusively on newspaper advertising was probably missing the bulk of the buyers.
Then, along came the internet. With very few exceptions, all those MLS listings were now available online for everybody and anybody to see. Some sellers mistakenly draw the conclusion that they can bypass their agent and advertise as effectively on the internet by themselves. But that may be a false assumption. The reason is that many of the most popular internet sites are open only to real estate agents. Realtor.com, the #1 real estate website in the country, where over 70% of today's home buyers start their real estate searches, only shows homes that are listed on various MLS services around the country. Many search engine sites such as yahoo real estate and others download their listings from Realtor.com, so once again, the hose has to be listed on a MLS to be included.
If you use almost any search engive to look for homes for sale in your local area, almost all of the hits will be large companies who have been able to buy top spots on that search engine. There are millions, maybe billions of dollars being spent by real estate companies on the internet for just this. It is BIG business! If you want to be on page one, or even page two of a potential buyer’s search, you have the best chance by listing with an agent who knows how to advertise on the internet and who has access to MLS driven websites.
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• Aug. 5, 2006 - Finding a Home's Value is Not an Exact Science
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“Finding home’s value not an exact science” ….. This headline in the Sunday, July 30 San Francisco Chronicle Real Estate section caught my eye. Everybody in the real estate business knows and understands this. The price a particular home will fetch depends on many factors. Some, such as the condition of the home, the way it is marketed, timing, and the ability of the seller or agent to negotiate are under the control of the homeowner and the agent the seller selects. Others, such as the competition at that particular time, economic conditions, weather (yes, weather can affect sales value) and location are not.
In this particular article, the writer obtained estimates of value for a home in Seattle from four on line sources and one professional appraiser. The values ranged from $291,000 to $375,000. That is huge!! Interestingly, the professional appraiser’s original estimate (based on public databases that are also used by online estimators) came in at $400,000 but was reduced to $305,000 after the appraiser actually visited the house!
Setting a list price is easier if the house is in an area where there are many similar homes and there have been recent sales to use as a reference, although even then there will be differences between specific hoes. It becomes much more difficult when the home is a custom home in an area where there are fewer sales, making it harder to find recent sales of similar homes to use as a comparison. While it is possible to obtain a rough estimate of value by using online sources, the true market value will depend on all of the factors listed in the first paragraph plus a lot more.
It surprised me that the author of the article seemed determined to avoid getting an estimate from a professional, full time real estate agent who works in that area. These agents are thoroughly familiar with and know the nuances of the local market conditions that can vary from week to week and from neighborhood to neighborhood. They know what is happening NOW as opposed to relying on past sales (although past sales are used as a baseline). They will try to establish the seller’s motivation for selling and their time frame, both of which may affect value. They will determine just exactly what the seller is willing to do to enhance the property and make it easy to show. And they will know exactly how aggressively they personally will market the home. All of the above will affect the final sales price of the home. Whenever there is some uncertainty (maybe because it is a unique home, or the seller’s expectations do not coincide with the agent’s opinion of value) a professional agent may consult with other respected agents from that area before pricing the home. This is common in some areas of Palo Alto, for example.
Sellers should be aware that pricing a home is not an exact science and should be careful not to just list at the highest price offered. Be sure to consider all aspects of how the home will be marketed, the current market conditions, the agent’s expertise and many other factors before deciding which agent to list with and what the list price will be. And do talk to a local agent who is in a position to discuss all aspects of the sale before making you decision. |
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Selling real estate in the mid San Francisco peninsula is unlike selling real estate in any other area. Just as the geographical area is famous for its microclimates, the real estate landscape has its own microclimates, each with its own idiosyncracies. An experienced agent will be in tune with the subtle variations from one subarea to another. But it is always changing. In this blog I will attempt to capture some items of interest to buyers and sellers alike, and to have some fun as well (see ""Fun Stuff"). If you have information you would like to have posted on this website, please email your suggestios to Lmercer@Lmercer.com.
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