Tuesday, May 20, 2014

Price Reductions Trending? You Need to be Prepared

There are many great Orange County area homes for sale. Click here to perform a full home search, or if you're thinking of selling your home, click here for a FREE Home Price Evaluation so you know what buyers will pay for your home in today's market. You may also call me at (714) 335-0844 for a FREE home buying or selling consultation to answer any of your real estate questions.

Selling your home without reducing the price?
Today I would like to speak with you about a pricing trend that I am seeing right now. This trend is price reductions. We have not experienced price reductions in almost a year and a half in our local real estate market. The market has been so hot that sellers believe that buyers will purchase for any price, but that is not the case anymore.

What we know is that inventory is up in Orange County, Eastern San Gabriel Valley, and the West Inland Empire. Inventory is actually up by 25% from January and sales have slowed down tremendously. If a Realtor or anyone else tells you that prices are still rising and the market is booming, well, nothing could be further from the truth.

Sellers are making price reductions for three different reasons:
  1. The seller isn't listening to the agent's advice about competitively pricing the property.
  2. The seller chose the price based on inaccurate information, or they just got a little greedy. 
  3. The seller hired an inexperienced agent to sell the home, and they overpriced it. This is happening more and more often, so it is important to hire an experienced agent. 

If you price your home too high the market will immediately shun you. Buyers will not think twice about your home and you will spend weeks on the market until you are forced to sell your home at a highly reduced price. You definitely don't want to put yourself in a situation like this.

To stay competitive and get the most money while pricing your property, follow these guidelines:
  • Listen to a great Realtor who has a proven track record of selling homes. Look at their individual record, not their company's record.
  • Ask the agent what their list-to-sale price ratio is. A true professional will know these numbers and can provide you with proof of these numbers. 
    • I'm currently getting my clients 99.8% of the asking price, and the average Realtor will only get you 92.2% of the asking price.

Make sure to do your research when pricing your home. You should know the home prices in your local area and how they compare to your own property. If you price your property just a hair below the real value, you will be creating momentum in the market and buyers will see a great value in your property. This will subsequently rise the price of your home through multiple offers and a bidding war may eventually ensue, causing you to get more money than you ever could have hoped for.

I also want you to know that the market will never let your home sell for too little. The market will naturally raise the price and buyers will offer more and more for your home. However, the market will allow an overpriced home to sit for months. This is why it is so crucial to price your home properly.

With this being said, if you have any questions about how to price your property, then please don't hesitate to contact me. You can reach me via phone or email and I would be more than happy to share some advice with you.