Pricing Your Home in Cooling Market

4 10 2006

As the housing market cools, one of the hardest decisions facing home sellers is how to price their properties.

Traditionally, brokers have set listing prices by reviewing how much comparable homes sold for in a neighborhood. Now, with prices edging lower in many places and the number of homes on the market climbing, checking comparable sales is becoming less useful. At the same time, many would-be buyers are sitting on the sidelines, waiting to see how far prices will fall. Bigger inventories of unsold homes also are making it harder for sellers to figure out how to make their house stand out amid the competition.

What it takes to sell a house varies from market to market. Some brokers are telling customers they need to underprice the competition — even if they think their home is more attractive. Sharon Baum, a senior vice president with the Corcoran Group in New York, recently listed a two-bedroom, two-bathroom apartment for $3.7 million. That was $100,000 less than the asking price for a similar unit five floors below, even though apartments on higher floors typically carry bigger price tags. “As buyers have more choices, you’ve got to make your apartment stand out,” she says.

Sellers are also being told to cut prices aggressively if their house isn’t moving — or risk chasing the market downward. If a home doesn’t get any showings in 21 days or gets 10 showings but no offers, Ned Redpath, president and owner of Coldwell Banker Redpath & Co. in Hanover, N.H., often advises the seller to slice the asking price by 10 percent. “We don’t like to see $2,000 or $5,000 price adjustments,” he says. “We want to see a real whack” that attracts attention.

Builders of new homes also are tinkering with their pricing formulas to generate sales. Mid-Atlantic Builders in Rockville, Md. is offering to adjust the sales price downward up to 45 days before closing if the price on one of its similar homes declines. Waterford Development Corp. will have homes in its Woodland Pond at Manchester development in New Hampshire reappraised two years after closing. If the price drops, the company says it will write the buyer a check for up to 15 percent of the original sales price, not including the value of any optional upgrades.

Even in relatively strong markets, brokers are paying closer attention to price trends. Wallace Perry, president of Coldwell Banker United, Realtors, Carolinas region, says he has begun checking multiple-listing service data every week or two instead of once a quarter to see how recent sales compare with deals that closed three and six months ago. “Things can change … very quickly,” he says.

The renewed emphasis on pricing represents a dramatic turnabout from the heady days of the housing boom, which peaked in the middle of last year. Bidding wars were common and, in many markets, homeowners simply looked at the last sale and asked for more.

That’s all changed. The National Association of Realtors said this week that the median sales price of existing, or previously owned, homes fell 1.7 percent to $225,000 in August from a year earlier, the first such drop in 11 years. There’s now a 7.5-month supply of existing homes on the market, the most since April 1993.

With so many properties vying for attention, sellers are also looking for creative ways to catch the eye of would-be buyers and their brokers. Some sellers are offering to pay closing costs or provide other incentives. When their 3,500-square-foot carriage house in Exton, Pa., failed to sell this spring, the owners dropped the asking price twice, to $449,000 from $479,000, says Beth Koser, an agent with Prudential Fox & Roach, Realtors. When that didn’t do the trick, the couple agreed to offer $10,000 toward closing costs to any buyer or agent who attended an open house within a two-day period. The home sold a few weeks later for $430,000. “The incentive created a sense of urgency,” says Ms. Koser. Buyers “saw that the seller was willing to negotiate.”

Other brokers are using incentives to counter competition from new home builders. In Tampa Bay, Fla., Craig Beggins, president of Century 21 Beggins Enterprises, recently put together a list of 16 incentives homeowners can offer, from paying the mortgage for several months, to outfitting a media room with a big-screen TV, to picking up the cost of day care for some period.

Another approach is a personal plea. Traci Smith, president of Century 21 Smith & Associates in San Antonio, encourages clients to court prospective buyers with a letter explaining the intangibles that make their home and neighborhood so appealing, such as the fact that the kids on the block trick-or-treat at Halloween together. During the height of the housing boom, some brokers were encouraging the same type of personal notes — but from buyers eager to get their bid accepted.

Some brokers are trying to trigger bidding wars by setting an asking price sure to attract attention. Romeo Aurelio Jr., sales manager for Century 21 Hartford Properties, recently listed a small one-bedroom, one-bath fixer-upper in San Francisco’s fashionable Noe Valley neighborhood for $650,000, even though he figured the home would sell for $100,000 above that. “If we priced it at $750,000, it was going to sit,” Mr. Aurelio explains. “We marketed it aggressively at $650,000 and it generated 20 offers.” The house sold this week for $845,000.

And with more buyers hunting houses online, selling strategies are adapting to the new technology. Michael Gallagher, a financial-services executive, initially listed his four-bedroom house in Shawnee, Kan., at $274,500. When the listing expired, Mr. Gallagher’s new broker suggested that he boost the price to $275,000. Within weeks, the home sold for $271,000, $36,000 more than the best previous offer.

The explanation? Buyers who use the Internet typically search in increments of $5,000 or $25,000, says Kerwin Holloway, a managing broker with Reece & Nichols, a unit of Berkshire Hathaway Inc., which handled the sale. At the higher price, Mr. Gallagher’s home was likely to turn up in more searches. It also looked like a bargain to someone whose search started at $275,000. At the lower price, it was one of the most expensive homes priced between $250,000 and $275,000. Until recently, brokers had taken their cues from retailers, pricing a home at $199,500 because it seemed like a better deal than one priced at $200,000.

A property that’s not priced properly can languish on the market and get shopworn, says Dan Elsea, president of brokerage services at Real Estate One in the Detroit area. A four-bedroom house in Troy, Mich., has been sitting on the market for 10 months, even though the price has been cut to $349,900 from $394,900, Mr. Elsea says. By contrast, a similar home in the same market sold this month for $360,000, just 23 days after it came to market priced more appropriately at $369,000, he says.

Source: The Wall Street Journal





Pending Home Sales Index Shows Market Stabilizing

4 10 2006

Pending home sales are up, indicating a stabilization is taking place in the housing market, according to the National Association of Realtors (NAR).

The Pending Home Sales Index, based on contracts signed in August, rose 4.3 percent to a level of 110.1 from a reading of 105.6 in July, but is 14.1 percent lower than August 2005.

David Lereah, NAR’s chief economist, says the rise in the index is a hopeful sign. “Our sense is that home sales may have reached a low in August — the Pending Home Sales Index shows home sales should be fairly stable over the next two months, although a minor decline is possible,” he says. “With fewer new listings coming on the market, we should be able to draw down the inventory supply early next year to the point where home prices will rise, but at a slower pace than historic norms.”

The index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed and the transaction has not closed, but the sale usually is finalized within one or two months of signing.

An index of 100 is equal to the average level of contract activity during 2001, the first year to be examined, and was the first of five consecutive record years for existing-home sales. There is a closer relationship between annual changes in the index and actual market performance than with month-to-month comparisons; analysis shows a strong parallel between changes in the index from a year ago and the actual pace of home sales in coming months.

Regionally, the PHSI in the West rose 9.2 percent in August to 112.7 but was 16.9 percent below August 2005. The index in the South increased 4.0 percent to 126.8 in August but was 9.4 percent below a year ago. In the Northeast, the index rose 3.6 percent in August to 95.4 but was 12.4 percent below August 2005. The index in the Midwest was unchanged at 93.8 in August and was 20.4 percent lower than a year ago.

Sourec: FLORIDA ASSOCIATION OF REALTORS





Florida Popular as a Place to Live Nationally and Internationally

4 10 2006

A first-time public opinion survey asked the question: Where do you want to live? Americans picked Florida as their third favorite state, with North Carolina first and Virginia second. Internationally, Florida ranked No. 2, surpassed only by California.

The Anholt State Brands Index — http://www.statebrandsindex.com — recently looked at the responses of 9,000 U.S. citizens and more than 12,000 foreigners regarding the appeal of all 50 U.S. States. The poll, created by government advisor Simon Anholt and powered by global market intelligence solutions provider GMI, found that American panelists ranked North Carolina and Virginia as the top two states where they would like to live, while neither state made it into the top five of the global ranking.

Foreign panelists ranked the big-name states — Florida, California and New York — in the top five, while home-turf panelists reserved the top five slots for some of the smaller-name states, such as Colorado and the afore-mentioned North Carolina and Virginia. In fact, some of the more obvious big names did not make the overall domestic top five, and Florida was the only state to make the top 5 on both rankings.

For instance, foreign favorites California and New York ranked nine and 39 respectively to Americans, while foreign panelists ranked them four and one. In some cases, the foreign panelists chose American states based on misperceptions. Generally, they judged all of New York State, for example, based on the image they had of New York City. And many mistakenly believe that Washington, D.C., is located in Washington State.

The study looked at each states’ “brand,” or the perception of that state held by residents within the U.S. and throughout the world. It looked at six perception areas: tourism, exports, people, governance, culture and heritage, and investment and immigration. In tallying the total marks for each state, the study finds “a big gap between the megabrands of California, Florida” and the other states. “Hawaii and New York are in the second league of brand power,” the report notes, “and then there is another sizeable gap between them and the remaining 46 states.”

“The brand images of U.S. states, as a rule, are more up to date, more detailed, and more likely to be based on fact than fiction amongst domestic audiences than overseas respondents,” says study author Simon Anholt. “The most noticeable difference between how Americans rank the importance of their states and the way foreigners do so is the presence of Virginia and North Carolina in the U.S. panel’s top 10, and their absence from the non-U.S. panels’ list. The high domestic profile of these three states probably has much to do with their relevance to American history, which is not as familiar to foreign audiences as it is to domestic ones.”

“Brand image is critically important to the prosperity of all communities, yet it is hard to identify, hard to explain, and remarkably hard to alter,” says Anholt. “It is critical for the political, cultural, social, educational and business leaders of each state to understand their brand, and to see how potential visitors, investors and future citizens view them. If the image doesn’t match up to the reality, they can decide what to do to close the gap.”

Top five ranking

Responses of U.S. residents:

1. North Carolina

2. Virginia

3. Florida

4. Colorado

5. Oregon

Responses of foreigners:

1. California

2. Florida

3. Hawaii

4. New York

5. Washington

The survey was conducted between May 25 and June 12, 2006. A representative sample based on age, gender, and where applicable, geographic region, race and ethnicity, was collected in the United States (9,000 completes) and the top 15 inbound tourism markets (12,410 completes) for a total of 21,410 completes. For further information about the Anholt State Brands Index methodology, visit http://www.statebrandsindex.com.

Source: FLORIDA ASSOCIATION OF REALTORS®








%d bloggers like this: