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Archive for the ‘Sellers’ Category

I continue to be frustrated when I read news reports about the housing market. It drives me crazy that people who know nothing about real estate, aren’t in the business, continually write reports that are misleading (in my opinion).

A recent LA Times article talks about both year over year and month over month data. It is almost always misleading to evaluate the real estate market based on month over month data, especially a broad measure like median sales price.

The key to the market’s health is ALWAYS, let me say it again, ALWAYS about volume and transactions. As long as their are willing and able buyers, the market is good and healthy.

The challenges over the last 18 months has been not only the lack of buyers, particularly in the higher price ranges, but also the lack of ABLE buyers. In other words, there are many cases where there are WILLING buyers, but because of the huge lending pull back, these buyers are not able to obtain financing.

As you can see from the graphic below, the Denver market as a whole is showing broad strength in looking at year over year numbers. For some of the southern area markets, such as Centennial, Highlands Ranch, Castle Rock, Parker – the year over year numbers are much more pronounced; meaning that Q1 of 2009 was exceptionally weak, and Q1 2010 was substantially stronger.

source: LTGC, Metrolist

In any case, I continue to see progress in the market as a whole. Sure, there are still several problems: financing for condos remains difficult and the upper end of the market is still out of balance in terms of sellers and buyers (more sellers than buyers). However, I am seeing higher end properties begin to sell when the buyer(s) begin to see the value (i.e. “deal”).

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I can’t say it enough: this is about as good as it is going to get to buy and sell real estate. With prices having taken a beating over the last several years, and interest rates at probably the lowest point for possibly the next 20+ years, you HAVE to ask yourself: Am I living NOW in the home of my dreams? If not, what is holding me back?

Although some neighborhoods around town have not experienced significant declines in price, the majority have to some degree. Factor into your cost of money (interest rate on your mortgage) and like I said, now is an UNBELIEVABLE time to buy.

If you are a Seller, you have to consider the following: there is not that many homes for sale! In many neighborhoods, such as Willow Creek, Homested – there is a shortage of homes on the market (exception: the upper end of the market – homes >$750k). The listing inventory for the last 2+ years has steadily declined (see chart below).

September 2009 Listing Inventory - Denver MetroList

Regardless of where you fit in these scenarios, it may be in your best interest to take a few moments to re-evaluate your situation.

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People tend to think that when the market is down, they should do nothing, and wait until the market goes back up before they make a move. While that might make sense if you are “cashing out”, that is not the case if you are moving “up” into a more expensive property.

Why?

Let’s use the following example:
Your current house, House A, was worth $300,000 at the peak of the market.
Your “move up” house, House B, was worth $500,000 at the peak of the market.

So, to keep the math easy, let’s now say that the market is down 20%.
– House A is now worth 20% less, or $240,000 (20% of $300,000 is $60,000)
– House B is now worth 20% less, or $400,000 (20% of $500,000 is $100,000)

Here is the point: House A lost $60k, House B lost $100k. The difference between the two is $40,000. You actually SAVE/MAKE $40k by making the move BEFORE the market goes back up. Yes, you are losing $60k on your current house, but you “making” $100k on the new house. Why wait to pay $100,000 more for your new house?

AND, we haven’t looked at interest rates yet, which can make things even more expensive. Stay tuned!

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Here are some factors you must consider in making your decision to list your home for sale:

1. I only encourage people who absolutely have to sell to be on the market right now.

2. If you are looking to get a certain price for your home you are going to have a very difficult time selling your home.

3. In most circumstances you are NOT going to get what you are hoping to sell your home for. The suggested list price I am going to recommend will most likely make you sick to your stomach.

4. No matter where you price your home, do not be surprised if buyers bid 20% below your list price. However, if you price your home leaving room to negotiate with a buyer you are going to end up selling for a much lower price than you ever imagined.

5. You cannot price your home based on past sales. You must price your home to where the market is going, not where it has been.

6. The biggest mistake sellers are making right now is they start too high and end up chasing the market down.

7. If your home is not sold that means it is overpriced. End of story.

8. If you want to sell your home for the most money possible, put a 30 day sales price on your home. Once you pass the 30 day mark, the market becomes extremely treacherous and it is almost impossible to gauge when and if your home will sell and for what price.

9. Real sellers understand this is a buyers market and they are going to have to make a real concession in order to get a buyer to buy now vs. waiting.

10. Most agents will not be firm enough with you when it comes to price and commission.

I understand that the points above do not paint a very positive picture for any potential seller. However it is my job to be very direct and honest with any person who is seriously considering putting their home on the market for sale. Potential sellers cannot afford not to be fully educated on what it takes to get a home sold in this market. Mistakes can be extremely costly.

HOWEVER….

There is some very good news!!

If you are fully prepared for the dynamics of this market you can sell your home quickly at the best price possible in today’s market. The majority of homes that sell, sell within the first 30 days of going on the market. In most cases, selling quickly means a higher sales price. Despite all the negative real estate headlines, it is very possible to sell your home. And for those sellers who are also buying, you will find a market filled with some incredible possibilities.

Sellers: if you haven’t yet gotten sick on your computer, call me and I will come right over with a sickness bag….just kidding.  If you really are considering a sale in this market you are fooling yourself if you are not really thinking about the above statements. 

Call me if you want to discuss in person – 720-881-5715

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