Incentives, price cuts power house sales

Home sellers and their agents are combining creativity with tried-and-true marketing techniques to promote properties in this softening market.

Sellers who watched home prices climb in their neighborhoods last year must adjust their expectations, recognizing that rather than watch buyers wrestle over their home, they must woo buyers with price reductions, offers of cash and sometimes even cars or vacations.

At the Oct. 19 Northern Virginia Association of Realtors Convention and Trade Show, a presentation delivered by broker David Howell of McEnearney Associates in McLean showed that more than half of all properties going under contract in Northern Virginia in September had a price reduction from the original asking price.

The average price reduction for those homes: 8 percent.

Real estate professionals agree that price reductions are a successful technique for attracting buyers. A few agents say they find that more unusual incentives work, in part because of the sophistication of consumers in the Washington area.

“We have an intelligent market here,” says Donna Evers, a broker/owner with Evers & Co. in Washington. “It’s expensive, but people are thoughtful, and they are using their heads. They will do some comparison shopping before they buy, but once they see the value in a home, they will make an offer.”

Realtor Sharyn Goldman of Long & Foster Real Estate’s Bethesda Gateway office says that buyers and sellers used to look at “comps,” or comparable homes in the same neighborhood.

“Now ‘comps’ are looked at as the competition,” Mrs. Goldman says. “Sellers need to look at other homes in the neighborhood that are on sale now or have sold in the last couple of months, not six months or a year ago. There are so many more homes on the market that sellers are really fighting against others in the area.”

Mrs. Goldman says that while last year there were only a few garage town homes on the market, buyers now have hundreds from which to choose.

“Last week I pulled up listings for a buyer and found 178 garage town homes on the market in Germantown,” says Mrs. Goldman. “A lot of buyers who look there also look in Gaithersburg, and I found another 198 on the market there.”

Mrs. Goldman says the incentives that work best for sellers are monetary. She recommends lowering the price and indicating on marketing materials that this has taken place.

Realtor Mark Griffin with RE/MAX Distinctive Realtors in Reston says his philosophy is to price a home correctly and get it in the best possible condition.

“While first-time buyers focus on closing-cost assistance, move-up buyers are looking for price reductions,” Mr. Griffin says. “Price reductions are fairly common in this market. If sellers are working with a good agent, they can watch the market and every two weeks determine what is actually selling and price the home accordingly.”

Mrs. Evers says that while price reductions are happening, she is sometimes surprised that the reductions are not deeper. She says she assumes that some sellers are opting to take their homes off the market rather than reduce the price more.

“If the price of a property started out too high, the only choice is to reduce the price,” Mrs. Evers says. “I think we are seeing more price reductions right now on listings that have been on the market since Labor Day without an offer.”

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