My New Blog

This information below is from my most recent Newsletter.

The Dangers of an Unreasonable Asking Price

One of the most common and costly mistakes made by sellers is setting an unrealistically high asking price. Every seller wants to receive the highest closing price possible for their house, but losing sight of fair market value can have serious repercussions.

In some cases a lack of objectivity results in overpricing the home, other sellers may subscribe to the theory that pricing high initially leaves room to negotiate lower later. Overpricing from the outset could actually force you to end up settling for a lower price than you would have received by setting a realistic asking price based on market research.

Common Results of Overpricing

Fewer "Eyes" on Your Listing - Mispricing your home can prevent it from ever being seen by a certain percentage of potential buyers who might otherwise be interested in your home. Savvy buyers today research the local market even before acquiring an agent. Buyers will search available listings both online and offline in real estate publications, and in most cases they will set a price range to limit the listings they review. If your home is outside of their range even by a few thousand dollars, it may not be on the buyer's radar.

Most buyers will then hire a specialized buyer's agent, and together they will develop a strategy to evaluate homes that match the buyer's needs within their acceptable price range. Occasionally an agent will provide information on a home above the buyer's maximum price point, but rarely will they stray too far above that boundary.

Lack of Showings - Agents who work with homebuyers will know local market conditions and the listing prices of comparable homes. If they feel your home is overpriced, they will be reluctant to show your home to their clients for fear of wasting their time.

Helping Competing Listings - It may not be your first thought, but overpricing for your home for the market can actually help the competition. Your home's higher asking price will make other nearby homes of equivalent size and quality look steals in comparison. Astute selling agents for other properties will use the price gap between your home and their own a further selling point of their listings.

Stagnation and Stigmatization - If your home is priced higher than what buyers in your market are willing to pay, it runs the risk of sitting on the market for a longer period. The longer your home sits on the market, the more likely it will become stigmatized as "overpriced" in the real estate community. Once that happens, removing the stigma and restoring interest in your home can be a difficult task. Even dropping the price later will not have the same level of impact as the initial, negative, impression of your listing.

Tough Negotiations - A high listing price can be a warning flag for buyers that they use for leverage during the negotiation process. If the asking price seems high without home improvements or features to warrant the difference, buyers may assume that you are either A) not well informed about the market, B) not a highly motivated seller, C) have a need for money (perhaps forced by a move to a higher-priced area), or D) are simply creating some bargaining room. If the buyer believes any of these, they are likely to fish to determine how low of a price you will accept.

On the other hand, if your home has languished on the market as a result of a high price, buyers may believe you are becoming desperate. Interested buyers will make lower offers as a result.

Appraisal Problems - Should you be fortunate enough to find a motivated buyer willing to pay your overestimated asking price, you still run the risk of having the deal fall apart prior to closing. Most buyers will use some kind of financing to pay for their home purchase, and every lender requires an appraisal of your home's value.

The appraiser will review your home in person to assess its value based on similar homes that have sold (usually within the last six months). If the appraised value is below the agreed selling price, the lender wills only approve a loan for the lower amount. You may be forced to reduce the selling price or risk having the deal collapse, and your home return to the open market.

Overpricing and Today's Market

Today the tendency to overprice relative to the current market can be even more tempting. Home prices have dropped since the high peaks in the summer of 2006, and as a result many are in denial about the current market value of their home. Homeowners who bought within the past five or six years in particularly may be overly influenced by the purchase price they paid during the real estate boom.

This comes at time when overpricing couldn't be a worse strategy. There is a smaller pool of highly motivated buyers, and today's buyers tend to be well educated about the market. Without the assumption of price appreciation, few buyers are willing to gamble and overpay for a home. In addition, credit tightening has reduced both the number of buyers who can qualify for a mortgage as well as the size of the mortgages available.

Creating a Pricing Plan

When pricing your home, the best strategy is to remain objective and compare your home closely to similar properties on the market. Take the opportunity to visit open houses and pay attention to recent sales in your area. Are you more focused on selling quickly, or on receiving the highest possible selling price? Is the price you have in mind reasonable when compared with what other homes are asking for and selling for?

Priced Too High: Corrections

If your home has been sitting on the market with few offers or showings to its name, consider whether or not it is priced correctly. Review recent sales of comparable listings, especially those that have sold since your home went on the market. Another method is to ask agents who have shown your property for feedback they received from their clients. Have buyers who looked at your home in person purchase other homes in the area instead?

Acting quickly to adjust the asking price is the best way to keep as much of your marketing momentum as possible. Depending on how long your listing has been on the market, additional marketing may be needed to help repair some of the "damage" done to the reputation of your home's listing at the higher price. In some cases, you may be forced to slightly under price your listing to create additional interest.

Rob

With all that has went on over the last three years we often forget what it was like before that. In fact, we have enjoyed low interest rates for quite a while.

Caution! This market is not always going to be like this. What a perfect world if you are buying real estate and have money for the down payment. It is not as enjoyable for someone that needs to sell their property now.

We have some issues coming that will change our market.

1. We are experiencing some of it right now with buyers financing. If you need more than 90% financing and do not have good credit, you may not be buying a home in 2010 or 2011. Some would say that is the way it should be. In our market, we do not have first time home buyers with that kind of savings.

2. Interest rates will not stay low-meaning under 7% - through next year without government intervention. When I bought my first home we thought 10% interest was a good deal.

3. Government spending is going to cut future government housing program funding.

We are all guilty of taking things for granted and then are really upset when they are gone.

If you are looking to purchase property in the next 12 months or wanting to sell your home in the next 12 months I would encourage you to not delay. If you have to get your finances in order then I would make it a priority. If you are not sure where you would move to if your home sold, I would rent.

Government spending is going to affect us all and many things we have grown to expect from our government is going to suffer.

I will have better news next time ( I hope ). I have had several deals not happen this year and that used to be very unusual.

Rob

The is a reminder! To qualify for the government tax credit you must have your home under contract by April 30th which is the first step. The property must close by June 30th, 2010.

Heads Up! Foreclosed and short sale properties take longer to close than normal closings. You need 30 to 90 days to close on these properties in general. Some will close more quickly with local banks being involved.

Don't miss this opportunity if you were planning on purchasing in the next 6 months for your primary residence. Do it now!

Rob

There is only 65 days left to put a home under contract by April 30th, 2010 to qualify for the First Time Home Buyer ($ 8,000) and the Move Up Home Buyer ($ 6,500)tax credit. You must close on the home by June 30th.

This is a great incentive for buyers that are planning to purchase a home this year. If the only reason you have not bought a home is you are waiting for the right deal, then this is it. There is nothing you can do that would save you more money than buying while qualifying for the tax credit. You receive a check for the credit or pay a lot less tax. It is cash one way or the other.

Buying a home for $ 10,000 less later may save you $50-$60 per month in your payment assuming interest rates stay the same which I think the likelihood of that is slim.

Why would you wait if you have the capability to purchase now?

Rob

Pre-foreclosures or Short Sales are becoming the future for people with hard times, doctor bills, job loss, reduced income and ARM loans coming due. The Short Sale is a far better way for the seller verses foreclosure. In a Short Sale the mortgage holder must approve the sale. The disadvantage of Short Sales have been for the buyers. It has taken up to 120 days for mortgage companies to make a decision whether to accept it or not. The buyer does not know if they have the property purchased until it is approved. That will soon be in the past.

Congress is applying new rules for mortgage companies to follow starting in April. I will be taking training on the new changes in February. The most significant change so far is the mortgage company will have to offer financing alternatives to the owner. When these options do not work then they must consider a Short Sale Purchase contract and make a decision in 10 working days.

I will not go into more detail until I have the complete training.

This will give buyers much more confidence in making offers on Short Sale properties which in turn will sell the properties quicker.

It is important that you use a Realtor that has experience with Short Sales so your transaction will go as smoothly as possible.

Rob

We have been so busy we have not kept you informed the last few months.

Today, I am encouraging you as buyers and sellers that we are getting properties sold. It is just taking longer. The foreclosure market and short sale markets are alive and well. The mortgage holders are so busy they can not keep up even in our market.

Buyers, to get a great deal on a foreclosure property or a short sale you need 60 to 120 days of time before you must close on the property. If you can not wait that long they will not work for you. It does not matter whether you have cash, 20% down or financing 100%. It does not matter if you can close in a week or need 30 days to close. The mortgage holders can only move so fast. Don't be frustrated and mad. Either you have the flexibility to wait or you don't. If you do not have time, purchase property that is seller owned and seller negotiated. You may be surprised the deal you can get and meet your time frame.

Sellers, if you want to sell your home you have two choices. 1) price the home competitive and wait. 2) price the home aggressive and offer incentives to the buyer. Our market over the past several months has proved if your home appears to be a great deal it will attract buyers. If you do not have buyers looking at your home then it is not priced attractive. If you have buyers going through your home and not making offers then it is not ready for showing. Sellers, I can not say this loud enough. You home must appear to have a great price on your home and have it in better condition for the money than anyone elses. If you have a home that needs updating or remodeling price it that way.

We had a good year in 2009 because we had sellers that did what it took to sell and buyers that did what was needed to buy.

Have a great day!

Rob

The market here has really improved. Any type of distressed property is attracting a lot of activity and many offers. We are having bidding wars on homes that are foreclosures or short sales. Many are selling at asking price.

We are also seeing more activity on retail market homes considered a good value. If a sellers home is not being shown now, it is considered to be priced too high.

By the end of July we had sold more volume ytd than we sold all last year. It is taking more sales due to the price of properties, but with the increase in active buyers we are going strong. I expect September to be even better.

The exciting news is properties are starting to sell in other markets across the US which is going to allow the folks, that have been wanting to move here for a couple of years, to finally get their home sold. Many of these buyers are not looking for cheap property, they are looking for quality at a good value.

I will keep you updated as we work our way through this market.

Our inventory of homes is dropping. If you were considering putting your home on the market in the Branson area - please give us a call. We are looking for homes in the $100,000 to $250,000 price range.

The $ 8000. tax credit for home buyers is ending November 30th.

Rob

There is no question buyers are chasing bargains during the past 10 days. We have had 3 homes go under contract in the last few days priced under $ 200,000. Interest rates are down some and I think we have found the price points for distressed homes in the Branson area market. The bargain shoppers are realizing it is time to buy or miss out on the good deals.

The homes we have in Emory Creek Ranch were shown over 30 times in the last few days with 5 offers and 3 homes going under contract.

Today we saw a strong buyer market with 22 properties going under contract in the Tri-Lakes area. Price ranges today were from $66,000 to $599,000. That is encouraging.

For those that are looking for a great deal, you better buy now.

For those that are selling a home, price aggressive, have it in good shape and you can sell your home.

Rob

Over the last two weeks market activity has concentrated on homes under $ 240,000. This would not necessarily be unusual since many families are looking to make a move and summer time is a good time to do it.

However, this year is different. Most of the homes in our market with good activity on them are considered a great value or low prices. Distressed homes including Short Sales and foreclosures are getting most of the attention. The last report we ran 45% of the market sales were distressed homes.

This is not good for the average Joe wanting to sell his home in the current market. There are two bright spots for Joe, one he can sell his home at the current market value and move up into a nicer home at a discounted price and two, we are getting homes off the market. Less competition!

The banks and mortgage companies are the competition right now. The good news is you can get a great buy if the timing is right for you as a buyer.

Rob

We has a Best Bidder Sale Saturday in Emory Creek Ranch and we put the home under contract. The home had just been on the market 10 days!

This was a foreclosed home that had been lived in for about a year. The buyer got a great deal.

We have more homes in this neighborhood owned by the same seller.

Rob