The premise at play is that the home being sold is unique and may solicit a buyer that is willing to pay top dollar. While there is an exception to almost every rule, this premise does not normally hold true, especially in a softening market. In other cases, homeowners may not understand how to adequately calculate the true value of the home, which almost always results in overpricing.
Austin, TX (PRWEB) August 6, 2008
It is time for some homeowners in Austin Texas to reconsider their pricing approach to sell their home. Here is why.
Austin Texas real estate remains one of the most solid investments in the country. Median home prices continue to increase while unemployment stays consistently lower than the state and national averages. Even after the burst of the technology bubble in a town loaded with technology firms, Austin's overall median prices remained flat from 2002-2004 at $99.22 per square foot in 2002, $99.24 in 2003, and $99.45 in 2004. But numbers can be deceiving!
While home prices in Austin have continued to increase overall, prices for homes that sold between $250K and $500K have actually decreased by 3.9% when comparing July 2008 to July 2007. Home prices have risen slightly for homes sold under $250K and over $500K, which puts the overall median price at a 2.2% increase for all of Austin Texas. Austin has just over 4,200 homes actively for sale as of the beginning of August with a median list price that is 15% higher than the median sold price for the first 7 months of 2008. With overall median sold prices increasing by 2.2% this year compared to last and with a 3.9% decrease in median home prices between $250,000 and $500,000, why are sellers asking so much more for the sale of their home than the market demands?
"It a natural instinct for homeowners to price their home above its true value when first listing it on the market for sale," says Brian Talley who is a an Austin Realtor® with Regent Property Group. "The premise at play is that the home being sold is unique and may solicit a buyer that is willing to pay top dollar. While there is an exception to almost every rule, this premise does not normally hold true, especially in a softening market. In other cases, homeowners may not understand how to adequately calculate the true value of the home, which almost always results in overpricing."
According to Brian Talley, "The higher a home is priced over the true market value, the more likely a home will take longer to sell." The facts also show that the longer a home sits on the market, the more likely it will sell for less. According to the 2006 National Association of REALTORS ® Profile of Home Buyers and Sellers, "Determining the right price for a home is one of the most important considerations when selling. Generally, the longer a home is on the market, the more likely it will sell for less than the listing price. For homes on the market less than one week, 23% sold for a price less than the listing price, but as the time on the market lengthens, that share rises. For homes on the market at least 17 weeks, 87% sold for less than the listing price."
It was less than a month ago that former Senator Phil Gramm was quoted saying, "You've heard of mental depression; this is a mental recession," when speaking about the state of the U.S. economy. This comment created an uproar that resulted in Gramm's resignation as presidential hopeful John McCain's economic adviser. Regardless of whether Senator Gramm meant otherwise by his statement, the numbers are clear that the U.S. economy is hurting. Just the same, the numbers also show that specific real estate market segments in Austin are hurting as well. The number of homes sold in Austin is way down with 26% less homes sold in Austin through July of 2008 compared to the same period in 2007. While prices have increased overall, 1,807 fewer homes have been sold so far this year compared to last. Again, for homes sold between $250,000 and $500,000, home prices have decreased by 3.9% in July 2008 compared to July 2007.
So what is a homeowner to do when selling their Austin home? Brian Talley says, "Price the home according to the true market value." First determine the median price of comparable homes listed and sold in your area over the last 6 months by having your REALTOR® conduct an Austin home search on your behalf. Determine whether comparable houses in the area are listed above or below the median sold price to understand the competition.
If sold prices are lower than asking prices, homeowners will need to price to compete with or beat the competition. If asking prices are higher than sold prices, (which is most often the case around Austin Texas), then look closely at sold prices and price the home as close to the market value as possible from the start. And for sellers who are worried that they will miss out on that perfect buyer who will pay more for their home than the market is demanding, rest assured that by pricing right from the start you are statistically increasing your chances to sell more quickly and for more money than if you overprice and it sits on the market.
Regardless, if the home is underpriced then buyers will take notice and the seller may receive several competing offers that ultimately increase the sale price. It should only take about 21 days of evaluating traffic flow and getting feedback from buyers to know whether the house is overpriced, which will call for a seller to consider an immediate price adjustment.
For homeowners needing help pricing a home, the first step in the right direction is to find a skilled and experienced REALTOR®. While there are plenty of quality Austin area REALTORS® to be found, contact the Austin Board of REALTORS® for help. For help finding the best REALTOR® in other cities contact your local Board of REALTORS®.