In 2005 you could sell your home based on "comparable" sales and add 1 to 3%. If you sat, prices would come to you.
In 2006, the en vogue transition was to refer to "competition" as opposed to "comparable" values. If you were better than the competition, you could still sell. And probably at the highest value ever.
In 2007 and 2008 the market continued to erode and agents migrated to the phrase "compelling." The price now had to be so strong that it created a physical whiplash in the buying population's collective neck in order to get their attention. Because in a market as poor as this one, only the compellingly priced properties sell.
No one shows up any longer with the motivation to buy a home. They probably are looking at buying because something is "wrong" or at least not right: that could be a lengthy commute; too small of a home; not enough yard for the kids to play in; new schools for the kids; mom and dad moving in. In rare cases it is pure opportunism ($4000 tax credit for singles and $8000 for couples can do that). Yet if ask almost any buyer what they want in a house, and leave the question open-ended and nine times out of ten the first thing they'll say is "I want a good deal."
This is not a market where anyone is interested in paying market value. People may refer to their past real estate purchases like this; my friend last night was talking about the home he had built four years ago and called the transaction "fair. They obviously made money but I don't feel like I overpaid for my home." People might refer to their 2009 purchases that way... but if they do, the term "fair" is used with some disappointment.
Make no mistake, homes are selling. But what is selling is a lot easier to understand then the why. The How is almost as complicated as something Bernie Madoff contacted: Thou Must Cheat in Order to Succeed. In simple terms, that means go to lengths and do things everyone else in the marketplace is unwilling to do.
A cheater's set of rules to get-to-gone with your home:
1.) Compelling Price. If ou think this is a "duh," think again. This is the hardest and most fundamental lesson a seller must come to grips with. If what is driving their interest in buying is that they can get a great buy at a low rate, than fundamentally their buyer will be operating with the similar value-based motivation. A compelling price means that the sum of the parts instantly create recognition in the buyer of "that is remarkable, worth-seeing, and worth my time." Some markets require greater price dumping than others. There's a home on Honey Run in Flying Horse that my friend has listed for $450,000. The sellers paid $522,000 for it in 2006. One would think that in a marketplace off 7.5% from it's peak in 2007 (yes, 2007 was the NGT peak) that a 14% reduction would be sufficient. It isn't getting any showings. The reason is Reason #2...
2.) Don't plan on sitting. Get it over with. Even if there were around 500 closed transactions last month, there are 5802 buying options out there. Many buyers operating right now have seen homes that they liked, sell. Some have lost out due to higher offers. So if something has been on the market for 90 days or longer, they only want to know one thing: "what's wrong with it?" It's funny, they NEVER think "oh, they're holding out for price, and they're right to do so." Really... buyers don't care about your motivation, but they are unbelievably willing to pass judgment on someone who they think has not come to grips with market realities. For buyers, their real issue is this: "am I a moron for liking a home the rest of the market has denied?" The reality here is that as a buyer, the best buys are the long-on-market homes. These sellers are much more apt to just give up than someone who has been on the market weeks and not months. If your initial asking price does not net an offer, plan on correcting the price within two weeks and do so repeatedly until the market is found. Unfortunately, $1000 and $2000 price corrections may register on tracking sites and REALTOR hot reports, but they create very little impact in terms of increasing buyer activity. $5000 to $15,000 price reductions accomplish that. Don't believe me? From November 1, 2008 through today, homes that sold from $250,000 to $500,000 in less than 30 days sold at 97.3% of asking price. Homes that sold in the same price range during the same time but took 90 days or longer sold at 96.1%. Okay, 1.2% and $3840 doesn't amount to that much? How about this... the under 30 days properties sold at an average of $327,000. The homes that sold at 90 sold at $320,000. That's ANOTHER $7000. In short, by getting it done 60 days faster... the fast-selling sellers netted an ADDITIONAL $11,000 on average. Take that FREAKONOMICS.
3.) Out-condition Everything. This goes way beyond staging. Buyers who are buying generally are sacrificing their own houses - or - have very little downpayment. Just because they're broke but somehow qualify for a loan DOES NOT MEAN that they are "settling" for anything or have reduced their expectations at all. I openly wonder if tax credits for granite counters and soaking tubs would get people buying houses faster. The iPod-loving generation buying homes these days is used to getting it their way in every other transaction. When spending six digits, they expect no less. So while staging and decluttering sets the rooms into more logical traffic patterns, they don't correct old worn-out carpet. Or bad paint. Or decks needing staining. Or grout that is cracking. Or caulk that is missing. Or lawns that are dying.
4.) Eliminate the pink elephants. It's like Jeff Foxworthy-style Redneck Jokes.... if your home backs to a busy road... it probably won't sell. If your home has an out-dated floorplan (see bi-level/split)... it probably won't sell. If your dining room/master bedroom/yard is too small for space-loving Americans... it probably won't sell. If your home is next door to Fifi the Hellhound... it probably won't sell. Paint and flooring is fixable. Lot-specific, floorplan-specific or neighborhood-specific issues are almost entirely incurable. Honestly, if your neighborhood prohibits parking cars outside, and you share a flaglot driveway with your neighbor and their two grown, stay-at-home children all have a car... forget about it. No one will buy your home when the neighbor's old truck is parked in your backyard. (in other words, my own time on market would be years not months if I was one the market...but guess what has me thinking about moving?)
5.) Clean it. Not just tidy up and spruce it up. Detail it. Would you clean your car before trading it in? Detail it? Add another zero to the price tag. Don't you think a buyer would expect that? Would you expect a used car to have a motor that works? Well when was the last time you cleaned your furnace? The gutters? Your moldy shower? Finally...
6.) Prove it. Have the home inspected by a licensed (or in Colorado, ASHI/NAHI) Home Inspector and provide a detailed summary of the report with all the receipts accompanying the repair actions AND a Home Warranty. Buyers have enough reasons to keep shopping. Remember the reason they're shopping though: they want to buy. After seveal showings and picky feedback it may not seem like it, but the reason REALTORS are driving these people around is the expressed interest in purchasing. The easier you make it to buy (and the less time you spend selling andpointing out features and attributes that only matter to you) the more likely the buyer will find your property at least interesting.
The market right now is a full-speed race to get to "interesting." The more you ratchet up each of these attributes, the better your chances of getting to "worth the buyer's interest." If you can excel at all six, you are probably getting close to remarkable.
We live in an age of increasing transparency. There is no fooling anyone in a marketplace characterized by doubt.