How much is too much?
Sometimes the trick to selling a 'dog' is lowering
by Adam Levermore-Rich
Last year, at the peak of the housing market an ambitious homeowner
in Atherton put a house up for sale with an asking price of close
to $16 million. In December, the house remained unsold.
A month later, Tom LeMieux of Coldwell Banker in Menlo Park was
brought on to figure out how to get the house moving. Without thinking
twice, LeMieux lowered the price of the house by more than 50 percent
to $7.95 million, a price more reasonable for the declining market.
Finally, the house sold for just under $6 million. It's a scenario
that's been replayed often recently in the mid-Peninsula area. Sellers
are finding that their properties are taking longer to move, and
for the first time in years, they've been forced to take lower offers.
LeMieux said the housing market has gone through a sea change this
year. "Over the last couple of years, at any given time in the Atherton
area, there were maybe 10 to 15 properties in an active listing
status," he said. "That grew to over 50 homes for sale in Atherton
this year. Right now it has declined a little bit." He said that
there are currently 26 properties listed in Atherton. The same can
be said for the market in Palo Alto. According to the Santa Clara
County Association of Realtors, there were 56 new listings in Palo
Alto in July, compared to 27 for the same month last year. Prices
are taking a hit as well, with the average sale price dropping from
$1.3 million last July to $910,000 in July 2001. LeMieux said sellers
can blame these figures on the economy. For the last few months,
he said, homebuyers have been very much on the sidelines, watching
the economy, and they have been looking at value differently. They
have wanted to prove to themselves that if they were going to make
a purchase that it was worth what they were paying. "Our biggest
barometer in this area is of course the stock market, and the NASDAQ
in particular, just due to the types of jobs we have here," said
LeMieux. "It all grew a little healthier in late April and early
May when the stock market rebounded a bit. That gave buyers a little
confidence to put their toe in the water, and we've had a steady
stream of sales in all price ranges since that point in time." LeMieux
said the message to sellers is that there are buyers out there.
"It's not a terrible market by any means, but we're correcting off
the frenzy of last year. Buyers are looking at value differently.
They're very well informed. If they don't perceive value in a seller's
price, they won't purchase." If that happens, properties start to
linger on the market, meaning that prices need to be adjusted downward
to achieve a sale. LeMieux said the rule of thumb is if a new listing
sells quickly-within 30 days-then it was priced to the market. If
it stays on longer than that, he said, the message to the seller
is that they were priced too high. The American Homeowners Association
says overpriced houses can have more far-reaching effects than just
slow-selling houses. On their Web site, they warn sellers: "Set
the price too high, and you'll get a bad rap from buyers and experienced
buyer-brokers who can see through your inflated listing." They suggest
getting an independent appraisal of a home's market value from a
professional real estate appraiser. "Every real estate agent and
seller has different philosophies about pricing," LeMieux said.
"Mine is not to price it too high but not to price it too low, to
get what the market comparables are and to price it to the market.
If we're right we stand a good chance of selling relatively quickly.
If we're wrong, or if the market continues to erode, then you have
to constantly monitor the market conditions and adjust accordingly."
Ultimately the decision about pricing rests with the homeowner.
LeMieux suggests sellers should listen to the counsel of their real
estate professionals, who, if they are doing their job correctly,
will present them with a market analysis that will show them how
similar homes are selling. But despite that counsel, he said, agents
often see sellers who have chosen to list their homes higher than
what the agent suggests. "That very seldom works, but sometimes
they just want to test it higher and adjust it downward if it doesn't
sell," he said. Price is not the only barrier to a timely sale,
said LeMieux. He points to two other components that aid sellers
looking to get their house moving. First on the list is to determine
how well the property is being presented. "There are staging alternatives
and tricks of the trade in terms of doing some personal editing
of furniture and personal belongings to ensure that you're giving
the most positive impression possible," LeMieux said. Second, he
suggests sellers look at how the property is being marketed. Is
it being regularly advertised? The property should be put out in
the Realtor community through tours, open houses and other avenues
that agents have at their disposal to expose a property to the marketplace.
In a press release geared toward sellers, Michael Blomquist, owner
of Michael Scott Properties, agreed. "I've always worked from the
premise that selling a home is all in the marketing," Blomquist
wrote. "It's important to set your house apart from all the others
and bring it to the attention of as many prospective buyers as possible."
LeMieux said even if all three factors-price, presentation and marketing-are
in place, there are still things that can affect the speed at which
a property sells. "If it's on a busy street, if it has an awkward
floor plan-there are all kinds of specific elements about a property
that affect its desirability," he said. Ultimately, then, those
factors will translate into price. "Some houses," LeMieux said,
"are simply perceived more desirably than others."