Every real estate broker has a graph or chart that shows prices go down as
time goes up. Those visuals are based on data from somewhere. We've showed those
images to owners at least as long as I've been a Realtor, back to 1989. While
they may have made some impression at one time, in the run-up of prices, all
those fear invoking images lost their power. Time on the market was negligible
for even the people who tested the market to its max. Today time is once again
money and the evidence is local.
The new economy home buyer is smart. The tools available to them to discect
markets are sharp. Negotiating strategies give the buyer control, even in
would-be Seller Markets. A simple tool is to offer the owner their price, with
no right to cure defects, and an appraisal contingency. This approach locks out
the competition, locks in the owner. Throw in a relatively quick closing and
quickly the buyer has flipped a Seller's Market to THE Buyer's Market. The power
of leverage is immense and price will be reduced to where the buyer wants it
more likely than not.
Leverage for the Owner is in precision pricing. The ingredients of precision
pricing is a market analysis which includes appraiser used adjustments to
account for real differences between the most recent sale relevant houses in the
neighborhood, and a realistic understanding of deficiencies in the home. A pre
pricing inspection by a home inspector will reveal the nickle and dime items
buyers may use to adjust price by half-dollars and thousand dollars. Fix those
items and you pay fair price. Leave them for the buyer and you will pay
dearly.
A price established by adjusting for differences in a home will place the
house perfectly in the appraisal window. Leaving no risk of an under appraised
price, there is no chance that a buyer will have a late in the game lever to
force the price down when the seller is most vulnerable.
I looked at 15 sales in the near west Madison market including University Heights, Vilas, and Shorewood Hills. Homes that
sold without a price reduction sold in an average of 38 days. Those that sold
with at leastt one price reduction were on the market for 80% longer. The prices
those owners accepted were 2% lower than the seven who sold without a price
change. For what it's worth, the people who sold without a price change grossed
96% of their asking price. Those that reduced price settled for about 87% of their initial asking price! One person who expressed great confidence to me at the start gave in after a year and ended up about 28% below the price he/she was so sure of.
Almost no one is in a hurry or wants to give away their house when they
start. But after some time of dissapointing results, it seems owners are giving
away what they would not have had to had they pricision priced in the beginning.
Pricing is essential in this economy. Accepting the reality is the difference in
time and money. The view of reality is clear with precision pricing.
Don and Betty Draper, married in 1953, divorced in season three, lived in Ossining, NY a city comparable to Madison, WI in its housing stock; modest to luxurious. The Draper home is a style common to Nakoma, Maple Bluff, Shorewood Hills, University Heights, Vilas, and University Hill Farms.
