Thursday, February 5, 2009

What a Bargain

So what do you consider a bargain? For many of we look for the big sign in the story that tells us that the product is 10%, 20%, 30% or more off the original price. In Real Estate customers watch for price reductions.

The difference between the consumer product and a home is a little harder to figure out. A product usually has an acceptable retail range that it is sold for in the story. In tough times, retail does resort to huge discounts, Christmas 2008. The housing market is extremely fluid and a home has so many factors that go into pricing a home that have nothing to do with the actual structure. The philosophy of discounting just does not work.

I think the hardest part is that many of can not tell the difference between a house and a home. A house is sold on the market; a home is where you live. Even in the best market people have a tough time selling their home because they almost always think that it is worth more than the market will allow.

The National Association of Realtors has seven tips for sellers (click on link for details):

  1. Consider comparables
  2. Consider competition
  3. Consider your contingencies
  4. Get an appraisal
  5. Ask a lender
  6. Be accurate
  7. Know what you’ll take

The most important, in my opinion, is number six; BE ACCURATE!  Studies show that homes priced more than 3 percent over the correct price take longer to sell. Then when you start reducing the price you begin chasing the market.

So what does this have to do with the Alameda Housing Market?

As I track the weekly inventory the price reduction number has been jumping out at me, because inventory changes daily, I took a look at all 54 reductions in the market. Price reductions represent 37% of the inventory and more than anything I was curious to see if this strategy is working.

What I found was that most of the homes in town have only used one price reduction. A third of the properties listed have had two or more price reductions. I do not track homes that are re-listed so the numbers may be a little skewed. One home has had five reductions and is now the lowest priced listing in Alameda; 965 Shorepoint Ct, #211.

Seven homes have given up more than a $100,000 from their original list price. Here are the Top 5: 613 Haight , $256,000; 568 Central, $225,450; 609 Haight $198,000; 1417 Page, $185,000; 361 Ansel, $150,000; 1530 Grand, $105,000; 1534 Buena Vista, $100,000.

So for those thinking of selling the current information should be a warning signal that they should really focus on pricing their house to meet the market. For Buyers this should give you some guidence in how much to pay for home.


Link to Larger Version of Chart

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