Friday, March 13th, 2009 at 10:17 AM
Sellers – Get It Done!
We’ve heard about my strategy of sellers lowering their price early and often, and lowering enough to make a difference.
How’s it working?
To work right, it takes sellers who recognize that the buyers are looking for the deals. Sellers who ignore that and list high – insisting that ”don’t have to move” or “aren’t giving it away”, etc., are just waiting for the lucky sale. No problem, wait away.
We listed this house at 5146 Delaney in Carlsbad for $979,000, which was competitive with the other active listings, but we thought that we had a far-superior product. If there was a buyer who had seen the other two for sale, but was waiting for more bang – we might attract them.
There were NO calls the first 8 days.
I had sold these sellers their first two houses in California before they bought this one when new. Because of our long-standing relationship, they trusted me when I told them to lower the price immediately to $899,000 – a big hit for sellers who have only been on the market for a week.
We lowered the price, I had a big open house on a sunny Sunday, and within 48 hours had four offers. A bidding war ensued, and it closed yesterday for $940,000.
A couple of points for sellers:
1. Your house has to look like a deal to get offers.
There have been sellers who read what I post here that have told me they’re not going to hire me because all I do is give them away – and they don’t want to give them away. Sellers – you need to get over that feeling. IT’S GOING TO FEEL LIKE YOU ARE GIVING YOUR HOUSE AWAY, relatively, if you’re going to actually sell your house in this market.
My sellers had thought at one point there house was worth well over a million dollars – but is $940,000 still a good price for it? Yes.
2. You need to adjust early, and often – AND ENOUGH TO STIR EXCITEMENT.
Don’t linger thinking it’s going to get better, later – it’s not. The house on Delaney looked hot because it had only been on the market for eight days, and at $899,000 was a whopping $80,000 under the other two actives – which now are still both unsold, at 136 and 160 days on market, respectively.
3. You never know when the next REO is going to list nearby.
A week after opening escrow, an REO on the same street listed for $829,900 – and it’s still unsold. Think we could have gotten a bidding war going now? No way.
Sellers – you can fight the trend, but your chances of beating it are heavily against you.
I could also point to my seller from last summer who sold the townhouse on the lagoon. He fought it for a year, but finally took my advice and we closed for $669,000 in August, 2008, just $19,000 above what he paid for it in 2004. NOTHING HAS SOLD SINCE, and there are four active listings in the complex, two listed since June, and now a short sale has lowered down to $495,000.
Think that seller is happy today?
Posted on Friday, March 13th, 2009 at 10:17 AM in Thinking of Selling? | 23 Comments » | 
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That’s great advice for a place with lots of liquidity.
I wouldn’t dare try that up here in Nor Cal for my house. We have some traffic noise but a huge bay/SF view (the two cancel each other out in terms of value). But only maybe 20% of buyers would take my place at any (reasonable) price because of the traffic. So I could chop my price as you did and generate no bids or maybe one, which without a bidding war would be well below the new offer price. Meanwhile, if I’d waited, more of the 20% who would be interested will have seen it and potentially bid.
So while you did that in a week, I’d be smarter to wait more like a month.
And I totally agree about making reductions big enough to grab about attention. 10%.
Aztec | March 13th, 2009 at 12:58 pmNice pics on the Delaney house Jim. You must have one of those new mega-pixel camera phones.
GameAgent | March 13th, 2009 at 1:23 pmI don’t quite follow Aztec’s logic. Today any active buyers who have any type of access to the internet see all the available properties very quickly. Waiting, hoping for someone who doesn’t mind traffic noise is just that — a plan built on hope. Personally, I like the idea of hope but I feel it makes a very poor basis for a business or investment plan.
If I see a house on the market with no price reduction for 30 days I ignore it or at best think the only way I’ll buy this is with a huge discount.
But alas I don’t think this rational thought has yet permeated into SF — but I have no doubt it will. So my advice, — take Jim’s advice and act now, not 30 or 60 days from now when we have more layoffs, the bear market rally is just that — a bear market rally — and more people in Nor Cal realize what those in So Cal already know — everyone is going to take a major haircut in the value of their house asset from what it was at the peak. No area / house or situation is “special.” And those of us who do have money and can buy by now have built up a very large ability to wait.
Bob | March 13th, 2009 at 1:24 pmThat is a beautiful home. It qualifies as “Superior” w/ a price discount – no wonder it flew off the shelf.
Todd | March 13th, 2009 at 1:37 pmJim,
Excellent summary for sellers. Eventually the foreclosure pipeline is going to unstick and everyone will have to compete against those sales.
Bob,
As you’ve noted, those that have waited can continue to wait. Once you get past the first two years, the temptation to jump in declines.
Sellers:
If you want to sell now, price to sell. Once this bear market ralley ends… so will go the sales pace of ‘high end’ homes. Ask yourself how many people you know who want to sell in the next three years and how many you know sitting on large amounts of cash. Buy an econ 101 text book and plot the change in supply and demand curves.
Got Popcorn?
Neil | March 13th, 2009 at 1:54 pmNeil
When we sold a couple of years ago, we took the low end of the range (ya we used range pricing) and had to bite our tongue and pride to do it. But you know what? Just a couple of months later we wouldn’t have even been able to get THAT much!
And now, that same home would sell for 30-40% lower yet. So we did the right thing…we took what we could get and moved on. We sometimes drive buy the old house and wonder what the new owner is thinking right about now…
the good life | March 13th, 2009 at 1:57 pmOne of the better looking pools I’ve seen. Like the sunken spa especially.
Former RB Resident | March 13th, 2009 at 2:09 pmIs that house sitting sideways on the lot? Who would pay close to $1M for a sideways house? The bubble is a live and well.
Bobbo | March 13th, 2009 at 3:48 pmPools are the biggest money sinks. I always knock off value from a house if it has a pool. The ocean is usually ten minutes away, go chill in there.
ChrisL | March 13th, 2009 at 4:39 pmThat is a nice home. I just checked the listing site… who says “snazzy” anymore? LOL
http://klingerealty.vflyer.com/home/flyer/home/2254227
Kwaping | March 13th, 2009 at 5:28 pmWhen the bidding wars end, that will be the time to buy.
Nice looking house nevertheless.
JAP | March 13th, 2009 at 5:35 pm“When the bidding wars end, that will be the time to buy.”
I have a feeling you’ll be waiting for a verrry long time, if not forever. I firmly believe that the limits of the general public’s stupidity far exceed the floor of the housing market.
Kwaping | March 13th, 2009 at 5:48 pmIt’s not about waiting for a long time. The proof is there in the lower priced REO the week after the bidder’s war ended. Buying now is a sucker bet in the vast majority of cases. Chances are, you’ll end up eating some of your equity in the next year (or so).
That’s not to say that everyone who buys now is a sucker. As I’ve said many times, each buyer has their own reasons for doing what they do and some are better than others. But in general, betting your “best price” in March of 2009 will hold up over the next twelve months seems like a long shot.
If this means a few people can crow about how they got that great deal in a bidding war then I’m fine with that. In my opinion they’ve certainly paid those bragging rights, let me have them. I’ll wait until I see fewer REO’s “popping up” and slashing my equity before I even move in the furniture.
Thanks Jim.
ice weasel | March 13th, 2009 at 6:29 pmcalled on a sign today. Asked if the home was on the MLS. Answer was no.
OK, fine.
Asked price and was told bank is doing work and has not priced it yet.
Hmmmmm….
Asked about ballpark price…same lame answer.
Asked why they had a sign up already with no real listing, no price, and no nothing.
Was told the sign was up for a courtesy in case a plumbing leak or some bullsh*t line.
Told the person that was a great excuse.
The person took exception to my straight forward questions.
One can only conclude that the public is getting more and more jaded from these ***hole clowns that think they are professionals but are really just another shady ***hole realtor.
Conclusion: 99% or realtors are shady self absorbed clowns.
The worst part of it is that these shady shim shammers truly believe they are the “experts”
Shim Sham Boom Bam | March 13th, 2009 at 8:19 pm“Ask yourself how many people you know who want to sell in the next three years and how many you know sitting on large amounts of cash. Buy an econ 101 text book and plot the change in supply and demand curves.”
In case anyone is short on graphing paper…
http://www.google.com/insights/search/#q=mortgage%20foreclosure&geo=US&cmpt=q
no bubble here | March 13th, 2009 at 8:22 pmSimple Supply and Demand, Econ 101, like Neil said.
No demand for your house, lower the price.
Too much demand, then price is probably low, raise price.
Don’t wait long because supply is increasing and prices are continuing to drop. As layoffs mount, so will NODs increase, so will foreclosures. No money, no pay mortgage, no matter what the monthly be.
Follow Jim’s advice on price. Sell now, don’t wait. It isn’t going to get better. I’m seeing quick price drops in numerous zip codes. 2/2 condos in RB were once selling at $210,000 about 6 – 9 months ago. Just saw a listing at $135,000! 944 sf = $143 PSF!
Sellers, let Jim sell your house now, not next month, not the month after, now… Don’t chase the downward slope, don’t be a month behind in pricing, be a month or two ahead in pricing and let the buyers bid it up! Call Jim, he knows what he is doing.
I hope you don’t mind the plug Jim, but you’ve got the right mindset for this crazy market.
Blue Streak | March 14th, 2009 at 12:44 amThe hardest thing for sellers–especially those who bought at or near peak in fear of being “priced out forever” or have only bought one home–is to come to grips with the market’s view for their “valuable” home in a declining market.
I remember when we were young and less worldly, we bought a fixer and had big plans for it. Renovations got complicated and dragged out too long and then the market turned down. We did the typical move of “chasing the market down” (only lowering our price after we had missed the market window for that new, lower level price). We had originally hoped to get $900k, lowered our expectations to $800k and received an offer for $600k. We were so insulted! What did we eventually sell for? $400k.
We are MUCH smarter now.
shoppingaround | March 14th, 2009 at 2:54 amShim sham,
If you were theoretically interested in the house, you could have told the sign agent to call you when there is a price and leave your name.
Former RB Resident | March 14th, 2009 at 7:03 amFor the record Jim is excluded from my ramblings/rant last nite.
Jim’s the good guy people!
Cheers,
SSBB
Shim Sham Boom Bam | March 14th, 2009 at 8:00 amThanks Shim Sham – but you bring up a great point.
Why do they bother to put up a for-sale sign, then not try to sell it? I will never understand that part, yet you get this same response on virtually every REO in play.
The REO listing agents have so many that nobody is selling them, they’re just waiting for you to jump in their lap. Fat chance.
Jim the Realtor | March 14th, 2009 at 8:50 amBTW, snazzy = my word.
Jim the Realtor | March 14th, 2009 at 8:51 amSooner or later, the back-pressure will get these REOs moving, just like it did in the early eighties.
greenlander | March 14th, 2009 at 8:56 am“I don’t quite follow Aztec’s logic. Today any active buyers who have any type of access to the internet see all the available properties very quickly. Waiting, hoping for someone who doesn’t mind traffic noise is just that — a plan built on hope. Personally, I like the idea of hope but I feel it makes a very poor basis for a business or investment plan. If I see a house on the market with no price reduction for 30 days I ignore it or at best think the only way I’ll buy this is with a huge discount.”
That’s because you don’t understand it.
Your logic assumes that everyone will see you house within in 10 days. That’s simply not true; the buyer pool is not static. With my house, to sell it within 10 days, I would likely half to cut the price way too far because there would be so few potential buyers (I’m guessing 20% of that for a house with no noise). So I should wait 5x as long as a prime home before price cutting. Only after that much time would I truly know it’s overpriced.
And it’s not a hope strategy. It’s a PRAY strategy!
And we’re not listing right now anyway. Probably 30-60 days from now when there are likely more buyers. The market may be worse, but not for my house — I need more buyers to be interested at *any* price. Right now I’m not sure there are any at all, and so it would sit sit sit even at a crazy low $.
Aztec | March 14th, 2009 at 12:06 pm