Buyers' gain leverage; Sellers adjust to market shift

Sellers still wield considerable clout in today's residential housing market, yet today's buyers finally have negotiating power, too, now that it takes longer for homes to sell and there are more properties listed for sale.

By WINNIE DAVIS, President, and David Walker

Southland Regional Association of Realtors®

Sellers still wield considerable clout in today's residential housing market, yet today's buyers finally have negotiating power, too, now that it takes longer for homes to sell and there are more properties listed for sale.

Unlike other regions of the nation, the San Fernando Valley still does not offer enough housing to satisfy demand, which ensures that the market stays balanced rather than now tipping totally in favor of buyers.

Still, prices are not rising as fast as they were not long ago and that means sellers must offer concessions that were unthinkable at the height of the recent sellers' market.

"It's a market in transition," said David Lereah, chief economist for the National Association of Realtors.

Unfortunately, some sellers have yet to accept that fact.

Too many sellers remain reluctant yet inevitably will be forced to adjust their asking price for a simple reason, Lereah said: "because buyers now have a little more control, a little more power."

Here are suggestions on how sellers can adjust their thinking to fit a market where buyers have gained more clout: Get used to it - Accept that the market will set the sale terms. Never take a lower than anticipated price personally. In fact, get rid of all expectations, especially those still linked to yesterday's market conditions. It will make the process easier, smoother, calmer.

Nothing but frustration and anger awaits sellers who keep saying: "Last year my house would have appreciated by 20 percent. Surely it must be up that much now because it is so much better than anything in the neighborhood."

Keep in mind that there also can be other items other than price where a seller can offer flexibility.

Making it convenient for buyers by accepting their moving date, for example, might be an alternative to offer. Or, offer to pay for closing costs.

Extending flexibility in any area provides an edge, something to offer, something of substance and value, that can work to the sellers' advantage during negotiations.

Remember that buyers typically focus on the price and a home's amenities. Offer incentives that address those two areas. Expect finicky buyers - Improving the appearance of a home, especially those subtle elements that enhance curb appeal, is essential in a market where buyers have a wider selection.

Where buyers not long ago could ask for zero concessions and were forced to make an offer immediately, now sellers may encounter buyers who reject a house for the simplest of reasons - poor ventilation, inadequate lighting, scuffed flooring, missing screens.

Every home has flaws, yet a quick sale is more likely today if sellers strive to eliminate even minor shortcomings.

As one article state recently, instead of a turkey, make the property a turnkey - a house buyers can move into with few if any repairs required.

Check out the competition - Changing perspective is a challenge for many people, yet sellers could benefit if they check out other homes listed for sale in their neighborhood, doing it through the eyes of a prospective buyer.

Every homeowner believes their property is the best in the neighborhood and worth every single penny asked.

Until the competition is evaluated, until sellers find out what concessions other sellers are offering, or what amenities other houses provide, it will be impossible to know if the asking price is right. It takes discipline and openness to face reality.

Even if you have the best house in the region, it might be wise to price the house aggressively by setting the list price below a recent comparable sale. Does that mean the house has lost resale value? Or that the seller lost money? Not necessarily.

Not long ago homes were appreciating in value by 20 or 30 percent annually. Today, local prices are rising somewhere between 2 percent and 5 percent. Depending on when the house was initially purchased, the seller is likely to reap a considerable profit even if the house is priced aggressively with the intention of separating it from the competition and landing a quick sale.

Instead of listing the house by 10 percent or 15 percent more than you'd like to get, list for 3 percent or 5 percent more than could be realistically expected.

An aggressive price attracts more buyers, discourages low ball offers, and saves time during negotiations. Homes continue to sell today, yet sellers actions can determine how quickly that happens and at what price.