Pemeliza suggested that sellers might be better off staying put and locking in a low interest rate now, rather than reduce their list price. Shadash added that sellers should look closer at the other houses for sale, and price competitively (I’m paraphrasing).
Should sellers wait?
And wait for what, exactly?
If you are waiting for prices to magically come back to peak levels or higher, make yourself comfortable. If you are enjoying the home, and won’t move unless you get your close-to-peak price, no problem, but any market rebound is out of your hands. Do what pemeliza suggested, lock in a low rate, and shorter term and pay off the mortgage sooner.
If you want to do something to improve your chances of getting top dollar, fix up the house.
If you want/need to sell in the next 2-3 years, here are my thoughts:
1. You may not be that far off on price.
For those who are keeping their list price high because they’re heavily-encumbered and are hoping to get enough to get out, good luck – because you need a ‘lucky sale’, which are becoming more unlikely. Now that the law has changed and you can sell with no recourse, consider a short sale. Yes, your credit gets dinged, but if homeownership is too much of a financial burden now, waiting isn’t going to change it.
For sellers on the market longer than two weeks – your listing is now stale in the eyes of the buyers, and they will expect a healthy discount from now on.
The summer season is almost over. Drop your price 5-10%, and it should be enough to generate offers – if not, keep dropping until it does. At least you’ll be ahead of the other active listings, who are paralyzed with the shock that they haven’t sold and August is two weeks away – or ignoring the calendar altogether. Get a jump on them.
2. If you can’t, or won’t lower your price, then do home improvements.
The biggest problem with waiting is that your house looks more dated every year. Are you keeping up? Buyers will want discounts for work they need to do, so you might as well get some of it done now. Do your best to convert to the newer granite/stainless/travertine look. If your house is so old that it is functionally obsolescent, just clean it up and concentrate on pricing.
3. The new-home tracts are where the buyers cut their teeth on the latest designs.
Yes, in the last video, the only Plan 3 available is on the worst lot in the tract, and they probably have people in line for future releases. But buyers will consider those as competition, so the more you can look like them, the better. If you don’t want to spend big money on home improvements, at least consider installing new flooring/paint, ditching the old furniture, and removing all clutter. Spruce up the front-yard landscaping too.
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We were looking around La Costa Valley/Oaks over the weekend, and it appears that a glut of mcmansions is forming. But the problems were obvious – every house either had a funky floor plan, or looked dated even though it may have only been 10-12 years old. The houses purchased new without upgrades, and haven’t been improved since, look like fixers to the buyers.
Those sellers can wait, but they’ll need to upgrade sooner or later, if they want top dollar.
Yes, wait. As for home improvements it’s almost always a loss except for landscape which usually pays for itself.
Thinking about selling at peak pricing now is like thinking about buying in 2005 at 1998 prices. Simply not a realistic measure.
Oh yeah, with the new short sale law doesn’t that pesky 2nd have to agree to a short sale?
Thanks Mozart.
You say wait – wait for what, prices to go up?
I’m trying to help people here, are you going to suggest that they should wait 2-3 years and prices will be higher?
Nobody’s quite sure what’s going to happen with the new short sale law. Certainly the unintended consequences could be the seconds just completely refuse to agree to a short sale. The problem is the seconds and HELOCs probably know that there is a chance for some recovery if the homeowner isn’t paying rent. If you’re taking the free rent and saving it, it could be tough to keep that windfall, if somebody pursues you aggressively through legal means.
The answer is going to depend on why your trying to sell. If you relocating because of work or liquidating assets because of a life changing event like a divorce you’re probably going to take a bit of a hit on price.
If you selling because you want to downsize or move up then you can have some patience but you’re probably in the same boat as some of your neighbors who would like to do the same thing sometime down the road. In that case you either want to beat your neighbors on price or on quality.
As for the buying pool you probably won’t see massive demand from buyers for NCC real estate until we either get the next big thing startup company or some significant activity in the market that want to trade up to NCC property. When Rancho Pen, North Mira Mesa, University City get hot then we might have some buyers willing to push prices up in NCC. Maybe there will be an influx of big money east coasters looking to retire out here, but in that case schools probably don’t matter as much as proximity to the beach and services.
You may want to check out this post on home values in Coto de Caza.
http://www.cotohousingblog.com/?p=17400
Personally I say sellers should wait if you can handle 5 years or so (JMHO) ,. If not well I don’t know what to say.
And the school district thing I think will be less and less an issue, Charter schools are already starting to offer charter schools online, My gut tells me that it will only be a matter of time before these gain wide acceptance.
Of course neighbor hoods will still matter but I would not bet on a special school district IMHO.
Indeed, sellers need to get over the fact that they missed the housing bubble windfall. For those who bought their house for the right reasons, however, refinancing at today’s ultra low interest rates and staying put is not a bad consolation prize.
sell now or priced in forever.
Are sellers not realizing that although they won’t be getting peak pricing when they sell they’ll also not be paying a peak price when they buy again?
Yes, wait 2 years to sell.
So you think that prices will be significantly higher in two years.
We have seen certain statistical measurements on the increase, but on the street you’d be hard-pressed to prove that prices are going up today.
What will change in the next two years?
People want to know!
Yes, I would like to know what is going to drive prices higher in two years. All I can see are substantial local and state budget issues, lay-offs, high unemployment and even higher underemployment (continuing wage deflation, not inflation), higher prices for almost all necessities, increasing health care costs, a higher tax burden (whether blatant or hidden as a “fee”), and the over-arching fallout from significant Federal budget issues and what looks to be a contagious debt and solvency problem in Europe. But maybe I am missing something so please do tell.
Yes I am a ray of sunshine today.
Start giving Green Cards to folks from China/India who can buy 700k+ all cash.
Problem will be solved in few months if not weeks. Real estate in US is still much cheaper than in Asian Cities.
Immigration is the trump card and a large wave of “customized” Legal Immigration can potentially solve a lot of issues we are facing currently. Its the form of “Globalization” that can benefit the Main Street.
A stock market bubble would certainly help, but I do think in general the pent up demand to buy that built up during the run up (2005-2007) is turning into a pent up demand to sell. You’re probably at a decent level of organic buyers that would buy at today’s comps but have no desire to buy at higher seller prices. At the same time you have sellers pulling properties from the market that would like to sell if they can get their price and will wait for next year.
I guess we can watch inventory numbers early next year to see if this theory pans out. Obviously if sales numbers start increasing more than just noise you want might to get your property back out on the market.
I believe that in 2 years, and we’ll all probably still be here, prices will be up at least 10% from today. Definitely locally in NCCSD and possibly nationally.
The graphs are flattening, the pig is through the python in terms of bad loans, banks are moderating supply and employment has stabilized. By October there should be slight increases as the YOY numbers no longer reflects the hangover from the boost to home prices given by last year’s tax credit which ended in June.
Plus, rents are going up and prices will follow. People are still getting married, still having kids and saving a lot of money.
So I’ll mark my calendar and we’ll see. I’ll use the U/T numbers for June home sales.
“People are still getting married, still having kids and saving a lot of money.”
I don’t know about saving lots of money. Kids, marriages, and student loans are expensive these days.
If you must sell you should definitely use a realtor with the experience and expertise of JTR who has the best shot of getting you a fair price in this market.
If you can wait 3-5 years then the benefit would be that most of the must sell, short sale scam, crazy bank deal, half gutted, dead landscaping, missing appliance, home depot remodel flips gone wrong will have been purged from the system.
Prices could be lower or higher depending on the economy but I doubt it will be such an extreme buyer’s market.
My expertise is in economics not real estate, but because unemployment is a driving force keeping housing down, I don’t look for Mozart’s 10% increase in housing prices. The cuts at the local, state and national level of governments are just starting to be felt on Main Street, and the second round of corporate layoffs (Cisco, BofA, Wells, etc) is kicking in. Even those companies with “blowout earnings” are not hiring many more workers. At best, I see the stock market and housing market like the movie title “Sideways” for the next five years or so.