There's a change in the wind. Have we heard that before? I think so. We've heard so much about the change in the St. Paul real estate market that we're sick of it, but finally it seems that sellers in the St. Paul area are getting the message. More and more of my sellers are willing to reduce their prices. More and more are hearing the message, "You've got to be the prettiest house and the lowest priced in your area in order to sell." Too many listings means too much competition and too few sales.
Signs of the change:
- A friend who's listed out of my market area called asking for advice. Her agent suggested a 20% discount from her first list price. She wasn't getting showings. Her house is well kept but not really considered within the metro area which narrows the buyer pool. "Twenty percent!" bemoaned my friend. All I could do was sympathize and point out the reality of the market. If only 25% of the house listings are selling, your house has to have something to make it stand out. That usually means it has to be the best value for the dollar. Her agent is experienced in her neighborhood. She knows what she is doing. How much will it cost you to keep two households through the winter? What about the dangers of vandalism and damage from an untended house? What about the cost? Sometimes it's better to cut your losses and sell while you can.
- An investor recently cut his list price to well below his break even point. Reality for him is that holding costs cost! Selling at a reduction reduces his inventory and allows him to move on to the next project even if he loses money on this one.
- A buyer just contracted for completed new construction with an 11% reduction in price! In the St. Paul market, that kind of reduction on new construction is shocking. Contractor concessions previously amounted to closing costs or an appliance allowance which was usually not more than 3% of the list price.
- Another seller remodeled his house to convert it back to a single family home. The remodel was so attractive, he decided not to sell!
- Short sales are popping up all over. The time lag from presentation of offer to acceptance by the committee is atrocious, but for the buyers willing and able to wait, the prices make sense.
- Attendants at new construction open houses are no longer shutting out the buyer's agent from their commissions because the agent was not present at first contact. Many of these attendants are calling to inform us that our clients were through and they would be more than happy to compensate us for a completed transaction.
- E-mails are arriving from builders offering a hefty commission to buyer's agents.
All of these changes are the result of too much inventory. Buyers who are aware should buy now! There is a change in the wind that's favorable to buyers!
Sharon, I'd love to have sellers lead the market, but if they were the leaders, prices would keep going up!
Beth, the irony is that the sellers who are taking discounts on the current home are usually moving up and generally end up with a larger savings on their buy than they would have if the market weren't what it is!
Bonnie,
You're exactly right and I'm seeing the same thing in our suburban Northern Virginia markets. Prices are falling, dramatically in some instances. And, where sellers listen to good advice and follow it, sales happen! There aren't a lot of buyers out there, but there's always somebody who wants to buy a house!
Julie
Bonnie,
You're right. Sellers are starting to get the message. Often times they're getting as good of a deal on their next move up purchase too, so they're understanding the importance of getting the deal done. And hurray for those willing to invest in outstanding home staging!
Rick Claydon
Claydon Family Financial
www.payoffourdebt.com