- The Washington Times - Thursday, June 8, 2006

It seems that during a slowing market, the seller is the last person to get the message that the house needs a lower price. After all, the seller has the most to lose by “improving” the price, and it’s a tough decision to let go of a dream of cashing out.

A seller’s market builds over time. If the housing doesn’t keep pace as new jobs enter a particular area, home shortages create a seller’s market in which prices increase and bidding wars begin. Then one of two things happens to make the market cool down: The economy stops growing, or prices become too expensive (combined with an ample supply of rentals). A normalized/buyer’s market is born, and sellers need to get on board or hit the showers.

In the D.C. area, jobs have continued to enter the market this year at a projected rate of 65,000 on top of more than 70,000 new jobs in 2005. According to the Center of Regional Analysis at George Mason University, the area has a housing deficit of about 160,000 units. With plenty of rentals available this past year and skittish buyers, the area is coming off one of its hottest markets ever. It has cooled, slowed, normalized.

When people ask if it’s crashing, I just point out that if you were driving at 120 mph and slowed to 75 mph, how would it feel? The lower speed might seem a lot slower but still would be faster than the speed limit. We’re running at that fast, but slower, pace.

Nevertheless, as inventories grow and days on the market increase, those in the business know that what will sell a house more quickly than anything else is a price correction. Say it’s “reduced”; call it a “price cut,” “realignment,” “price improvement,” “repositioning” or whatever you want — the price needs to come down to where the buyers are biting.

I have collected quite a few excuses that sellers — and some agents — hold onto instead of biting the bullet and bringing down the price:

• “My house is worth it.” Well, according to whom? Usually this statement is followed by a shopping list of items that have been added to the house: hardwood floors, new appliances, upgraded bath and/or kitchen; you name it. Yeah, your house is unique, just like everybody else’s. The reality is, though your house may have all those neat amenities, so do the other dozens, scores or hundreds of homes in your market area that also are for sale.

• “It’s a great-looking house.” It had better look great if it’s going to beat the competition. Location, price and condition always will be factors in any market. It may look great, but looks have nothing to do with real value. When you start thinking your house makes the competition pale in comparison, it means one thing: You probably haven’t seen other houses like yours on the market.

• “I have to get this much or I can’t sell.” Oh, I really like this one. What a seller needs doesn’t matter to the buyer. The buyer is looking for as much value as possible in a community of high-priced houses. In the D.C. area, the average price lingers around $550,000. For that price, many buyers want the house to look good, have plenty of amenities and be connected with a realistic seller who is motivated.

• “If I can’t get my price, then I’ll take it off the market.” My question to that statement is, why are you on the market to begin with? Look at what it’s going to take to sell your home and realize your true goal — getting that next property. Looking at only what your house will draw is too short-sighted. The real question is: What kind of deal can I get on the next house?

The reality for most sellers, when they are dropping the asking price, is that they are still walking away with a boatload of money — just not as much as they wanted. They haven’t really “lost” anything. They’ve doubled their gain.

When pricing your house, look at these hard-core realities: What were the last few “solds” in my type of home; what is my true goal, to get a certain amount of gain or to get to the next house; and, finally, am I really in the game or am I playing around?

Get serious. Price right. Get the next home of your dreams.

M. Anthony Carr has written about real estate since 1989. He is the author of “Real Estate Investing Made Simple.” Post questions and comments at his Web log (https://commonsensereal


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