When Setting a Price, Listen to the Market

By WINNIE DAVIS, President, and DAVID WALKER

Southland Regional Association of Realtors®

Home sellers need to quickly tune into current market realities when setting a list price if they want a speedy sale.

The chief problem Realtors report today is that too many sellers still long for the days of the sellers' market instead of accepting that the market now is balanced. That tends to make them set an initial asking price way beyond what any savvy buyer would seriously consider, thus ensuring little activity and lots of wasted time. The trick these days is to distinguish a property from similar homes in the same price bracket from the very beginning.

A property should not languish on the market while the inventory of competitive properties builds. Price it right initially to give buyers a sense they are getting a value for their money and to avoid numerous, incremental price reductions that reek of desperation.  If a property immediately sees a lot of activity -- visits and second showings - resist the temptation to respond instantly to an offer. Allow some time for other house hunters to view the home. There still are plenty of examples of well-priced properties that are bid up over the asking price by multiple prospective buyers.

Home sellers need to learn about the local market. They should ask their Realtor for statistics comparing current activity with year ago trends as they apply to the region in general and specifically about their neighborhood. Learn about:

• Inventory. The number of homes currently on the market. Yes, there are more listings than a year or two ago, but the inventory is not high enough to tip the scales in favor of buyers. If anything, today's inventory is balanced, giving neither buyers nor sellers an advantage.

• Days on the market. The length of time properties stay on the market. Yes, properties are staying on the market longer, although properly price homes move very quickly. The time when an offer would land within hours or days are gone, except in limited cases.

• Median sale price. This is the price at which half of the homes sold for more and half sold for less.  Knowing the direction the median price is heading offers insight into current trends. For example, the median is not falling in the San Fernando Valley, as some people believe. Instead, it is posting mere modest gains between 1-5 percent compared to the 25 percent plus gains of a few years ago.

• List-to-sell ratios. This ratio, expressing the list price of homes over the selling price, will reveal drops in prices. It is a reality check that provides insight into multiple facets of the market. For example, it indicates if sellers were realistic in their initial list price or still attached to an out-dated reality.

The Southland Regional Association of Realtors is a local trade association comprised of more than 12,000 members serving the San Fernando and Santa Clarita valleys. SRAR is one of the largest local associations in the nation. Go to www.srar.com to search for every home listed for sale in the San Fernando and Santa Clarita valleys.

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