Maybe it's weeks. More likely it's months. But there comes a time when a seller needs to accept reality: If a house isn't selling, then the asking price is off.
It's time to cut. But how much?
"A healthy reduction should be at least 10 percent of the purchase price. Priced at $300,000? Take it down 25 or 30 grand," said Matt Fishel, who with his wife, Julia, are Realtors with Suncoast Partners (pinellaspeach.com) at Keller Williams Realty in Palm Harbor.
But folks are hard-pressed to be flexible on asking prices when their equity has disappeared, or when competitors — the distressed properties or short sales down the street — make their asking prices look sky-high.
Enter the Realtor, whose job it is to make sure the price is right in an exceedingly complex market.
"If it's showing, it's going; if not, we've got to drop it," said Greg Armstrong, who owns F.I. Grey & Son Residential Inc. in New Port Richey (www.figrey.com) and sells properties throughout the bay area.
"Today price is king," Armstrong said. Once upon a time, the industry relied on tried-and-true tenets to get a house sold, among them, condition, location, price, the agent you choose. "Well in this great recession," Armstrong said, "those have been replaced by price, price, price and price."
Ah, but what price?
When the seller and Realtor first meet, the seller may have a number in mind, based on information gathered from the Internet, as well as intelligence from the neighbor who swears the guy across the street sold his house for $300,000 and so should you.
"We get a lot of pushback when we sit down," Fishel said.
"We'll put it out at your price," Fishel said, provided it's not ridiculously unreasonable. But the price will have to come down if there are no bites. "If they want $225,000, we're going to consider $199,000," Fishel said, which brings in a new group of buyers.
"When you go to list a home with a real estate agent, they're going to look at comps, and make adjustments," said Walter Molony, a spokesman for NAR, the National Association of Realtors (www.realtor.org) in Washington, D.C., referring to comparable sales in your neighborhood and surrounding neighborhoods. One important distinction, Molony said, is that "a smart agent will differentiate between a foreclosed vs. traditional home in good condition. They'll make that clear to the seller, 'Here's what houses are selling for.' "
When a seller won't budge, Molony said, saying "Let's see what happens," that's when the waiting begins.
Establishing a sales price is a bit like Goldilocks: This one's too high, this one's too low. But which one's just right? It's a grim fairy tale, indeed.
Of the 12,316 homes, condos, townhomes and villas available for sale in Pinellas in August, 971 were sold, said Fishel, quoting figures from the Pinellas Realtor Organization, which manages the Multiple Listing Service and is under the auspices of NAR.
"A healthy market is about 20 percent," Fishel said. "But it's not a terrible market. It's a fairly healthy market," he said, particularly if compared with January 2008, which had a rate of about 4 percent.
For the seller, it means being deadly serious about setting a realistic sales price. For Armstrong, at the moment, sales of homes between $275,000 to $300,000 are fair, but not brisk. "But over $300,000? The number of sales drops dramatically," Armstrong said.
Fishel noted that it's the $100,000 to $200,000 price range where most of the action is, and $150,000 to $175,000 is where most of the sales are occurring for them.
Many sellers first meet with their Realtor armed with their own research, from county property records to numerous other online sources, such as Zillow and other sites. Another source used in the industry is the automated valuation model, or AVM, which spits out figures based on historical pricing, public records and other tech-driven data.
Fishel sometimes tells clients that online information can be unreliable. "Folks will see my listings on Zillow, but they are houses I've sold over a year ago." Comps also can't tell you if a house was gutted, or another was in mint condition. The AVM information doesn't always consider these factors either.
But knowledge is power. "As a rule, I talk to sellers once a week," Armstrong said. "That doesn't vary in good times or bad. They're the employer; if you can't talk to your employer then you're not much of an employee."
The motivated seller must do his or her research and sit down with an experienced sales agent to review all the data. Working together, they just might come up with the magic number that will sell the house.
Mimi Andelman can be reached at [email protected] or (727) 893-8272.