Where Do We Go From Here?
2008 promises to be a stabilizing, if not correcting year. But I have to tell you; so far, it’s been a tough pill to swallow. I have had several sellers on the back burner waiting to put their home on the market. The anticipation has been for a better start for the New Year as opposed to last year’s finish. The hardest part is analyzing current data to arrive at a reasonable entry price. I have actually gotten to the point of not even looking or asking what they paid for their home previously, for I am finding some unpleasant crossroads. But as any hardworking, ethical REALTOR will tell you, you can’t argue with the numbers. This makes our job even more difficult when we have to tell clients and potential clients, news that is anything but pleasant.
So in efforts to regain some sense of control for the Seller, I suggest the following as a guideline to prepare them mentally for the road ahead.
- Be prepared that entering the spring market, you are either setting the bar (and could potentially pay the price for it) or accept potential loss. I am finding sellers that bought during the last years of a hot market, several had paid top-dollar, if not overpaid. Unfortunately, when you go into a downturn market, you are faced with little to no appreciation (if you are lucky) and red-tag clearance pricing on units currently in the market. This is proving to be true especially with new construction offering higher amenities and prices that sharply cut into resales. In addition that there may not be enough new data to use, only aged listings from last year hanging on.
- Make some sound choices. If you don’t have to sell, don’t. We are still dealing with short-term effects here if you are selling under a 5- to 7-year window or you have pulled money out of your home in the last few years. Waiting for the market to pick up to more favorable conditions could very well be in your best interest. However, if you do have to sell, make a decision that you will price it accordingly so that not only does it increase its chances of selling, but appraising out. Put your property in show condition, which in the minimum means VERY CLEAN and de-cluttered. Avoid expensive upgrades and realize that these actions may not increase your bottom line, but make all the difference in the world with getting an offer.
We are not just in a market that favors buyers, we are in a market that is increasingly becoming more difficult for buyers to qualify. There is less in the pool, folks! Remember, only the market determines what a property is worth, i.e. the buyer. Not your REALTOR, not what you paid for it, or what you need to clear to make it an even wash. But it doesn’t end there, even if you get the number you want, you will need it to hold up to past sales in order to get a bank loan approval for your buyer. Banks have had to tighten up their belts so loans can be rejected for a modest sum of only a thousand or two. Which means, either your buyer coughs up the difference, you do, or the deal disintegrates and you start over, at a lower price.
- When you enter the market, understand that your competition can have an undesirable effect on you. This is very true for condos. What immediately happens in your building has more impact on your property that the building next door. In essence, your building is it’s own neighborhood or block. Since no home is an island, if a comparable unit to yours starts out strong but starts dropping their price out of desperate measures, it will act like an anchor pulling you down with it. A buyer really doesn’t care WHY they lowered their price and how that is perhaps an anomaly. Unless you have others that have maintained the integrity, you will be considered overpriced. Worse yet, if it sells, the appraiser uses only what was sold recently, not 9 months ago, not what others are asking for, only what recently sold, like it or not.
Understand that this market doesn’t last forever and that there is a season for everything. This, too, will pass. I believe we have a better chance of riding out the storm if we do as wisdom dictates, change what we can, accept what we can’t. Above all, let’s work together as a community of sellers, buyers, and real estate professionals so that we can all move forward towards balance.
(Julie Woodward-Trenker, ABR, ASP, CNS, RFS, e-PRO, Coldwell Banker Residential Brokerage, Serving the Chicagoland Area, 773-469-2037. www.REwithJulie.com, ChicagoREwithJulie.com. She has a great blog.)