Last week in this column, I detailed some indicators that reflect the changes taking place in the local real estate market. In the mix, some sellers are receiving a lower percentage of the asking price, both the inventory of homes for sale and the number of days it takes to sell a home are increasing, and new purchase contracts are being signed. It included statistics that indicated no.
The Las Cruces Association of Realtors reported on August 8 that the most troubling statistic is that the median July sales price was 2.1% lower than the median June sales price. The one-month decline is not necessarily indicative of that trend, but is consistent with price declines reported elsewhere in the country.
So what should sellers do? The answer depends on the property type, location and condition. Sellers can easily figure out how to price properties when trends are apparent. In a rising market, a common strategy is to lead the market by a few thousand dollars so that the value catches up with the asking price. In 2005, when the annual rate of increase was approaching 20%, a local Las Cruces realtor added to the description of the home for sale that the price would “increase by $1,000 per month until sold.”
On the other side of the coin, Las Cruces area home prices fell by about $1,000 per month between 2008 and 2012. I quickly learned that the longer I waited for a buyer, the less my property was worth. A common “kiss of death” phrase for sellers in declining markets is “I’m in no hurry.” The bottom line is that sellers in declining markets need to sell quickly. How fast is the $64,000 question?
Here’s a hypothetical example of how such a scenario might play out. Let’s say you asked a real estate agent to do a market analysis in hopes that the seller would put your home up for sale. The broker presents a sales her comp showing the closings that have occurred in the last 30 days. A potential problem arises here. The recently closed comp sale price was set six to eight weeks before he signed the purchase agreement. If the price falls during that period, the price drop will not become apparent until he six to eight weeks later. On the other hand, a seller who relied on comps to set prices based on his sales a month or two ago might be over the market the day the listing was activated. If prices continue to fall over the coming weeks and months, the amount of overpriced properties will increase daily. It is not uncommon for sellers who have overpriced their property to receive less than if they had priced it right the first time.
The fact remains that our market today is a mixed bag. There aren’t enough buyers roaming the streets today to put pressure on our ever-growing inventory, but there are far more than the number of “best homes for price” currently on the market. As a result, some sellers need to lower their prices, add incentives or improve the condition of their properties, while others receive multiple overpriced offers without lifting a finger. The ultimate challenge is determining which category or categories a particular home fits into.
Sellers whose homes are in excellent condition, are listed at a price that matches demand, or are in the most desirable neighborhoods will continue to receive multiple offers. I’m here. The key is to become an expert in a particular micromarket. Prices are balanced against demand, and the best-for-money homes, regardless of price, condition, or location, will always sell at, near, or above asking price.
See you at the closing ceremony.
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Gary Sandler is a full-time National Realtor and President of Gary Sandler Inc., a Las Cruces National Realtor. He loves answering questions and can be reached at 575-642-2292 or [email protected]..