Tuesday, February 21, 2006

Sellers Feel the Pain as the Market Turns "Dark and Gray"

A seller in Tracy writes about the travails of selling a home in a rapidly changing market.

[T]hen came my greatest challenge: selling my house. Last August, when I first listed my house for sale, things were optimistic. By mid-September, everything had turned dark and gray. The 180-degree turnaround in the housing market was not totally unexpected, just very bad timing for me. I knew that the basic economics of supply and demand would eventually catch up with the over-zealous housing market. I was just hoping I could sell my house before the tides turned away from shore...

Although the process took six months, the good news is that I have finally closed escrow on the sale...Little did I know last summer that this ordeal would take so long to complete.
The problem is not the price, according to one seller who has reduced her asking price by almost 10% since August.
In many ways the house for sale on Misty Morning Circle near Mather Airport is a typical Sacramento home: Three-bedroom, two-and-a-half bath, 1,450 square feet with a backyard. Asking price: $355,000 - just above the countywide median of $352,500 in January...On Misty Morning Circle, Leslie Gordon has been trying to sell her house since August. She started at $393,000, dropped it to $375,000 within about six weeks, then took it off the market in early December. She put it up for sale again three weeks ago at $355,000. Gordon is rooting for today's first-time buyers. Several have shown interest in her home, but none has made an offer. "It wasn't because the people weren't interested, or because of the price," Gordon said, "it was qualifying" for the loan that held them back.
Sellers might want to opt for a professional "stager" to groom their homes for sale, according to an article from the Sacramento Bee.
There are no firm numbers on how many sellers use stagers, but local real estate agents say they're seeing an increase in their use. And for one reason: In today's slower market, they could make the difference between a house that sells quickly and one that sits without an offer for weeks. "The selling of houses right now is more competitive, so we want to present our house in the best light to allow it to sell a little quicker," said Charlie Brown, noting the six other houses for sale nearby. "Last year during the height of (home prices) going up we probably could have done nothing, and it would have sold in a heartbeat..."

"I'm just now a believer in it," said Ed Favinger, broker at Realty World Franklin Real Estate Group in Folsom. "It's a function of the market. Personally, I think you'd be crazy not to stage a house now..."

The couple are anxious for the home, which hit the market Thursday, to sell because they're buying another in Sun City Roseville. "Obviously we don't want to be making two house payments for too long," Charlie Brown said. "We can do that for a while, but after that two houses becomes a really big expense."
Meanwhile, a financial planner in Lodi is one step ahead. He got out last May and is waiting for the market to crash, according to the Wall Street Journal (via Tucson Citizen, hat tip Ben Jones).
Some homeowners may also be taking advantage of recent increases in home values and cashing out as the housing market cools. Christopher Olsen, a financial planner in Lodi, Calif., decided he needed a bigger home with a new baby on the way. But instead of trading up, Mr. Lodi sold his three-bedroom, two-bath house for $406,000 in May - $26,000 more than his broker's estimate of the home's value - and moved into a rental property. "We are renting for two years, waiting for the market to settle, or crash," says Mr. Olsen.

6 comments:

arizonadude said...

Stageing is a waste of money. A home will sell itself if priced right. Next thing you know we will have live models pranceing around handing out starbucks drinks.

Rob Dawg said...

Anyone who insists it isn't about price should clearly price their house at eleventy seben bazillin simollians. Hey, if it isn't price as they insist then this won't change anything.

Hint:

"IT IS ALWAYS AND ONLY ABOUT PRICE!"

Anonymous said...

A couple of points:

1) Staging can be worth it for higher end homes where the current residents have horrible taste. A house that shows nice will fetch a better price than one that looks like a couple of drunk color blind marines live there.

2)A big reason why homes are sitting is because almost everyone with decent credit who wanted to buy a home has already jumped in. All that's left are the dregs and idiots. Not exactly prime customers. Add to that burgeoning supply and you have your answer.

3) When in doubt deny all terms. There is no housing bubble. Say it to yourself enough times and perhaps you'll even believe it. I know a lot of people who have been sailing down the river of denial so long that they won't believe they're wrong until it is too late. Far too late. Luckily for me I don't really like them that much so it'll be fun watching them suffer while pretending to be sympathic. You know, sometimes I suspect I'm not a nice person.

ocrenter said...

"It wasn't because the people weren't interested, or because of the price," Gordon said, "it was qualifying" for the loan that held them back.

actually, it is the price, lady. you got a starter home in the Central Valley to sell. you're target buyers will qualify for $150,000. your starter home is being priced at double that amount, of course this is a price issue!

arizonadude said...

Yes, I think we have exhausted the demand side of this market to a certain extent. A lot of people did buy homes and now we are mostly left with the subprime buyers. Lenders are lowering their standards to keep bubble going. We have used up alot of the demand in the last 5 years so I really think buyers are going to be hard to find going forward. I have heard in some markets that buyers have simply vanished.

hemorrhoidforhousing said...

Response to Anon:

2)A big reason why homes are sitting is because almost everyone with decent credit who wanted to buy a home has already jumped in. All that's left are the dregs and idiots. Not exactly prime customers. Add to that burgeoning supply and you have your answer.

Please be careful about your obviously shortsighted and not very educated opinion about whose left out here in the non-homeowner world.

My credit score is in the high 700's but I'm not willing to take out an i/o adjustable to buy a rundown pos. Maybe SOME of the people left decided to ride it out on the sideline when reality left the building.

So when you and other RE trolls are out coming up with "It's different this time" scenarios or making ludicrous statements like "Staging will make a sell" even on an overpriced home. Maybe you should consider it's the idiots and dregs still buying which is delaying the end of the bubble.

Just my sub-prime idiot dreg opinion....