Okay, before I start with this post, let me issue my disclaimers ahead of time. 

• I am not an economics expert.
• I don’t pretend to know how to solve the mortgage meltdown or present economic recession.
• The views I’ll be expressing in this post are simply observations from someone “in the trenches” of real estate, and a typical homeowner and taxpayer.

Shall we begin?   

Oberservation #1:  Where does the “buck” stop?  Nobody seems to be taking responsibility for any of these financial disasters.  Everybody (including Wall Street, banks and lenders, corporations, politicians, homeowners, renters, etc) points their finger at someone else and says, “You’re the one responsible for the mess I’m in.  A fellow real estate agent emailed me this YouTube video the other day, and I think it pretty much sums up the rationale of many these days.   I hope you get a chuckle out of it.  http://americandigest.org/mt-archives/nota_bene/rats_if_id_just.php 

Observation #2:  If you throw enough “bucks” at the problem, it will get better.  I’m assuming that the “experts” in charge of the bailouts know what they’re doing, but it seems to me that they’re just throwing money at the problem and hoping it heals itself.  I keep hearing about these needy corporations and financial institutions, but I have yet to hear exactly how the bailout money they receive will be helping the rest of us peasants. 

Observation #3:  I also keep hearing talk about helping “homeowners in trouble” stay in their homes.  Now I know this is a regional problem, but many of the “homeowners who are in trouble” don’t really want to stay in their home.  Many need to move to a different part of the country in order to find work, and they need help selling their home, not keeping their home.  Many, through no fault of their own, have found themselves owing more on the home than it’s currently worth.  And most of those people that need to sell can’t afford to because that would mean that they’d have to cough up cash to bring to closing – cash that they simply do not have. 

Now here’s where the real problem starts.  Most lenders will not allow an owner to sell his home “short” (meaning selling for less than what he owes on his mortgage) unless he’s behind on his monthly mortgage payments.  Therefore, a responsible homeowner who needs to move is stuck with the tough choice of either tryinig to keep current with his mortgage PLUS take on a rent payment in his new location where he has work, or else get into a default situation so that the lender will allow a short sale.  Even then, many lenders will proceed with the foreclosure process rather than allow a short sale. 

Now this is just my Jane the Real Estate Agent observation but it seems to me that lenders would be far ahead in the game if they encouraged homeowners to stay current on their mortgages but still allow them to short sell at current market value.  I say this because once the home is in foreclosure the lender has lost months of payments from the homeowner, the owner has ruined his credit, and the home will end up being sold for less than market value because lenders want these bank owned properties sold as quickly as possible, which means pricing them below current market value.

To me, jobs are crucial to help homeowners be able to stay in their homes.  Many of the folks losing their homes right now are the very people that helped build those houses.  Those in the construction trades have been particularly hurt by the housing downturn – a double whammy, if you will.  If the owner(s) have jobs, then they can generally afford to pay the mortgage and they won’t have to move.

Observation #4:  Not all the people in foreclosure are homeowners.  Many are investors that thought they could flip the house for a profit.  As the market started to decline, the smart investors bailed.  However some of the less experienced (or naïve, or sometimes greedy) investors thought they could ride out the downturn and make more money in a few months when the market recovered.  Of course I don’t think anybody saw this housing decline as lasting as long as it has been or being as devastating as it has been in some parts of the country.

Observation #5:  Regular, responsible homeowners may soon be in trouble.  Those that took out a conventional 5/1 ARM or 7/1 ARM are now faced with those resetting to higher rates.  Now these aren’t subprime interest only loans I’m referring to, but Alt-A’s.  Many homeowners assumed that they’d either sell their home or refinance these adjustable rate mortgages before they reset to current rates, and many are now facing higher monthly payments.  These homeowners are generally current on their mortgage with good FICO scores, but the higher rates may result in mortgage payments that are no longer manageable.  As Ordinary Jane the Real Estate Agent I have to ask why there hasn’t been some plan to allow these folks to refinance at current 30-year rates without penalty or fees.  Here is a very interesting video about the mortgage crisis and why it may get worse before it gets better.  http://www.youtube.com/watch?v=pmeBSWI9sF8 

Observation #6:  Despite all this doom and gloom there may be a bright spot on the horizon.  As the stock market continues it’s out-of-control roller coaster ride and as home prices have gotten so much lower lately, especially the bank owned properties, I think we’ll see a return of investors to the real estate market – not the same “fix and flip” or “buy and flip” guys we saw in 2004-2006, but rather long term investors purchasing rental properties with cash or small mortgages.  It’s now possible to get a good rate of return because of the low purchase prices, and as more and more homeowners end up in default the demand for rentals should increase.  At one of my continuing ed classes this past month, the instructor told of parents in Phoenix purchasing three bargain-priced properties as a sort of “college fund” for their toddlers.  When the kids are ready for college, the properties will be sold to fund their education.  As compared to the stock market a real estate investment is tangible, and some investors who have liquidity may decide that a long term real estate investment makes sense right now.  This would be good news for folks trying to sell a starter home.

Observation #7:  We all need to return to the mindset of past years when it comes to investing in real estate – that it’s a long term investment and that a home provides shelter for a family for many years.  I’m not sure when the nation’s mindset changed from the Ozzie and Harriet middle-class home-to-raise-a-family-in to the recent mindset of mini-McMansions with granite countertops (in a kitchen that is seldom used) and special rooms for state-of-the-art media equipment (for those few times when the family can agree on a movie to watch together) and spa-type bathrooms with jetted tubs (that nobody uses because it’s always a quick shower and out the door we go).  I don’t mean to be harsh, here, and we’ve all fallen victim to this latest and greatest trend of buying up every few years, but really when we look back on our childhood homes, can’t we be satisfied with less?  Perhaps we could even be happier with less.

Observation #8:  Yep, all the above has just been the personal opinion of Ordinary Jane – who has an opinion on the current state of housing.

As promised, we’re back on track here with the latest Prescott area real estate reports.  Ed Pattermann, Prescott area Windermere broker, has a knack for putting all these statistics into a very informative format.  Click on the links to these monthly graphs, and then I’ll discuss some of the trends we’re seeing here in Prescott.

Active Listings - Oct 2008

Homes Sold (Prescott MLS) - Oct 2008

Median Home Price - Oct 2008

Those are the graphs which tell the story on the current Prescott housing market on a month-to-month basis.  Home prices in the Prescott area remain relatively stable despite slow sales.  The slight decrease in housing inventory is the result of seasonal changes as well as a reduction in new home construction. 

 Now let’s look at the bigger picture with these graphs:

To me, these last graphs are the most telling.  The most apparent observation is that sales are very slow and inventory remains high.  What is encouraging, though, is that we may be leveling off at the bottom.  (As I have mentioned in previous posts, this will not be a low “point” with a quick bounce back, but rather a prolonged period at the bottom where inventory and prices have stabilized.)  Since our inventory has remained relatively unchanged for 2007 and 2008, it would seem to indicate that levels would not increase, except seasonally, though 2009.  As far as prices, we may see some more softening, especially at higher price points.  Prescott saw the biggest drop in prices from 2006 to 2007, with Prescott Valley and Chino Valley seeing some large price drops this year.  In Prescott, homes priced under $400,000 have seen more price reductions and sales as a result of those reductions.  Homes in Prescott priced under $300,000 continue to sell quite quickly, especially if the condition is above average.  On the other hand, homes in the $500,000+ category have seen fewer price reductions and fewer sales.  I would expect these prices to decline further thus causing sales to quicken.

So, is this good news for sellers and buyers in the Prescott area?  I think it is.  Sellers can be assured that if they price their home correctly, it WILL sell.  And buyers, especially in the “under $400k” price range can have some confidence that they won’t lose a bunch of equity, although they still need to view their home purchase as a “long term” investment rather than a short term vehicle to increased wealth.  The caveat for buyers to watch for right now is interest rates.  What small price reductions remain may not offset future increases in interest rates.  If you’re thinking of buying within the next six months to a year, be sure and keep an eye on the rates.

With real estate, timing is everything.  But so is making a smart housing choice that results in a wise investment for future resale and especially a wonderful and enjoyable place to call “home” for the next few years.

 Till my next blog . . . Gretchen

Coming soon ~ a few comments about the economy, mortgages, and how real estate will be affected.

As wonderful as computers are, they sometimes seem to be the bane of my existence.  It all started about three months ago . . . First of all, the hard drive on my Broker’s computer crashed, resulting in a couple missed months of those great market update graphs he provides to all us Windermere agents.  Then my Word program started acting up by freezing and deleting my efforts to be journalistically inclined.  Last week, a client of mine informed me that the mapping system on my www.MLSPrescott.com search results page had a glitch in it.  And today, as I was ready to send out email flyers, I got one of those annoying pop-up messages saying that I needed to inform Internet Explorer that they were a “Trusted Site”.  Excuse me, but what does that mean???

So, now, after taking a deep breath, (which resulted in a couple months of blog-free computer input), I am ready to face my computer crisis head on.  Thanks to my wonderful website designer (who just happens to be my son with www.qbs-online.com), my MLS search is fixed and now running better than ever.  And thanks to my wonderful broker who has diligently worked to provide those informative graphs of the Prescott housing market, I’ll be able to post those again each month (which, by the way, have been tweaked and are even easier to read). 

And a special thanks to all of you who have loyally continued to use my website for real estate information and property searches in the Prescott area.  Remember, too, I am only a phone call (928.533.3698) or email away (Gretchen@MyPrescottHome.com) if you any specific questions about the Prescott real estate market or the Prescott area in general. 

Location, location, location.  Of course, everyone’s heard the real estate agents’ mantra many times.  But it’s true.  In a “hot” market, the importance of location is sometimes minimized as buyers vie for a limited amount of inventory.  However those same buyers are the ones that suffer when they try to resell, especially in a soft market. 

What to look for when it comes to location?  Check out the neighborhood, not only during the day, but also in the evening.  Lots and lots of cars parked in driveways and on the street may indicate a high ratio of rentals in the area.  Are the yards in the neighborhood well-maintained, indicating pride of ownership?  Are there lots of homes for sale in the subdivision?  The fewer the homes for sale the more stable and desirable the neighborhood, which indicates a higher resale value in the future.  And, of course, busy streets, no backyard or inaccessible backyard, “cliff-hanger” homes, and views obscured by powerlines are all big negatives when it comes to location, 

Architecture.  Unique is nice, but if “unique” equals “weird”, then the house will be tough to resell in the future.  Also beware of dated styles, such as “bi-level” (raised ranch), “tri-levels”, and homes with single car garages or converted garages. 

Floorplan.  Some floorplans are very “choppy” or have a very bad flow.  If you’re a person with a “vision” you may be able to purchase a home with a dated floorplan and open up the space by removing a couple of walls.  Keep in mind, though, this can be expensive so it’s important that the home be priced low enough to allow for updating.  Also, look for a floorplan that won’t be outdated in a few year.  Examples of this are the bi-levels and tri-levels of the 70’s  What was “all the rage” back then is now a tough resell in most markets. 

Age of home.   Many people love the lure of a brand new home, and this can be nice but caution is needed.  If you’re buying in a new home subdivision, you can get burned when it comes time to resell, especially if you’re reselling before the subdivision is completed.  Remember the great incentives that the builder is offering you now will also be the kinds of incentives the builder will be offering to buyers down the road, making it very difficult to resell and compete with the builder’s price.  Add in the attraction of “picking your own colors”, etc, and you can see that you will be at a distinct disadvantage if you try to resell before the subdivision is complete.  If you really must have “new”, then purchase in an almost completed subdivision.  Or, better yet, purchase a builder “spec” home in an established neighborhood.  The quality of construction will generally be better, and resale value will be much, much better. 

If you’re a person with an imagination and you don’t mind doing some cosmetic changes to a home (paint, flooring, light fixtures, etc), you can often get a good deal on a home that’s looking a little dated.  Most buyers cannot look past mauve carpeting, brass light and bath fixtures, or pink walls, so homes that haven’t been updated since the early 90’s tend to stay on the market longer and the prices continue to drop.  If the home has “good bones”, why not consider making an offer?  Even after spending some money on cosmetic updating, you may have saved much more than that on the purchase price. 

Price.   Be careful here.  Don’t just assume that the lowest priced house ($/sq ft) is the best deal.  And don’t assume that the seller who has dropped his price several times is more motivated than the seller who has yet to drop his price.  Some homes are never bargains no matter how low they go.  If they have some of the issues discussed above, then you’ll have the same problem reselling down the road that the current seller is having now.  Plus things like a noisy street, declining neighborhood, poor layout, non-existent backyard will be things that will affect your quality of life while living in the home, too. 

When it comes to price, many buyers think that they’ll only get a bargain if the seller is willing to accept an offer that’s X% off his asking price.  Actually, a seller’s asking price is irrelevant when it comes to getting the most value for your money.  The most important thing is the market value of the home, i.e. what the home is really worth.

For example, Seller A may have a home that has a market value of $300,000.  He lists the house in January for $395,000.  It is now September and he’s dropped the price four times to it’s current list price of $335,000.  On the surface that looks pretty good – a price reduction of $60,000 in nine months.  Now consider, Seller B’s comparable home.  He listed his home in June at $310,000, and has just dropped his price to $305,000, for a total price reduction of $5,000.  Which seller is really more motivated?  Is it Seller A because he’s been on the market longer and dropped his price $60,000?  Or is it Seller B, even though he’s been on the market only three months and has only dropped his price $5,000? 

Of course, you’d like to purchase the home for less than the market value of $300,000, if possible.  Which seller do you think would be more apt to accept an offer of $290,000?  Will Seller A be willing to accept an offer $45,000 less than his current asking price?  It’s rather doubtful, however he might be willing to meet you half way and accept an offer that’s $22,500 off his asking price (or $312,500).  On the other hand, Seller B may be willing to accept an offer $15,000 off of his asking price ($290,000), especially in a slow market. 

Which represents the better bargain, a house that you’ve purchased for a total of $82,500 off the seller’s original asking price of $395,000?  (Wow, that sounds like a great deal, doesn’t it!)  Or a house you’ve purchase at only $20,000 off the seller’s original asking price of $310,000?  Would you rather pay $312,500 for a house that’s worth $300,000 . . . or would you rather pay $290,000 for the same house?   

Do you see how deceptive pricing can be?  That’s why it’s so important that you work with an agent that really knows the local market and will run CMA’s (Comparable Market Analysis) on the homes you’re interested in, so that you won’t be duped into paying too much for a house. 

Call me to discuss all the the ways I help my clients get the most home for their money in Prescott.  My contact information can be found at www.MyPrescottHome.com.

THE ANSWER TO THAT QUESTION is going to depend on many things.  First of all, if you’ve been following the Prescott housing data for the past several months, you are well aware that the local market continues to be in a slump.  Therefore, prices will probably continue to soften in order to sell off some of the built up inventory.  The only way I see that Prescott prices could remain steady or rise would be if we see an influx of buyers from Phoenix and Southern California.  This could spark the Prescott housing market and keep prices from slipping.  There are rumors that Phoenix may be turning the corner, but we need a few more months of data to confirm that. 

So does this mean it’s a bad time to buy a house in Prescott?  Not necessarily.  I say that because of several things:

•  It is truly a Buyers’ Market here.  Buyers have many more choices than they do when it’s a “sellers’ market”.  Also, buyers have the upper hand right now and can truly get a bargain price on a great house.
• There are certain pockets (i.e. particular subdivisions) where prices have gotten very competitive, and homes are selling relatively briskly in those areas.  There are also individual homes that are priced 5% to 15% below comparable homes.
• From an investment standpoint, it’s everyone’s desire to “buy low, sell high”.  If you can get a home now for 5% to 10% below market and sell it when the market is “hot” again then you’ll make a bundle. On the other hand, you could wait another year to purchase a home, in hopes that the market will fall a little more.  The problem with that is if you wait too long and the market has started to turn around, then sellers won’t be as willing to negotiate the price because there will be more buyers in the marketplace.  So you might end up getting a comparable home for the same price that you could have gotten it for now (because you’re the only game in town now).  How much money you make on your “bargain” will depend on whether the real estate market is “hot” or “cold” when you decide to resell.
• I think we’ll see a trend back to the way we viewed housing several years ago.  I see people viewing a house with more permanency, being a place in which to raise a family, or a place to grow old in . . . rather than a “smart investment” to either use as an ATM machine or resell to make a quick buck.  When one views housing the way our parents did, the price now and the price a year from now are not as paramount as the space we choose to call “home”.  

But whether or not this is a Good Time to Buy a Home in Prescott for you is going to depend on your own personal circumstances.  Here are some things that each individual buyer needs to consider:

Well the latest Prescott area housing figures are out, and it’s a pretty sad picture indeed. 

Prescott area residential sales (as recorded in the Prescott MLS) are down 39% as compared with year-to-date sales for 2007.  

Meanwhile Prescott area Residential Listings (all areas as recorded in the Prescott MLS) have increased from 2,249 in May 2006 to 3,072 in May 2007 to 3,231 in May 2008. 

During the same period of time, the median home price in Prescott has fallen from $346,000 in 2006 to $320,000 in 2007 to $305,650 so far this year.

What do these statistics indicate?  As much as I would like to jump on the bandwagon and agree that with some that we have reached the bottom of the real estate market in the Prescott area, I cannot.  (See this Wall Street Journal editorial by CYRIL MOULLE-BERTEAUX  http://online.wsj.com/public/article_print/SB121003604494869449.html)  There is simply too much housing inventory and no indication of a substantial increase in sales, other than a typical seasonal blip, to predict that the end is in sight.  Add in the tightening of mortgage requirements, as well as increasing foreclosures, and it would seem that the current slowdown will continue into 2009.

What might be the indications to look for that when we’re starting to turn the corner?  Watch for statistcs that show a decrease in housing inventory, coupled with increased sales, and shorter days on market.  (Seasonally there will usually be a decrease in housing inventory in the Prescott area during the winter months, but this is normally the result of expired and withdrawn listings, rather than an increase in buyer activity.)

Prices may or may not trend lower.  Generally I would expect to see additional price softening in order to entice buyers.  However, if the Phoenix market and the Southern California market turn the corner before Prescott does, that may put enough buyers into the Prescott market that we may not see the huge price reductions that those areas have.  The signals out of Phoenix are very mixed.  On the one hand, most reports indicate that the slow Phoenix housing market is continuing (as indicated by this news article: http://www.azcentral.com/12news/news/articles/2008/05/09/20080509housingdepression05092008-CR.html).  However, on the other hand, there was this news video about buyers camping out to purchase new homes in Mesa (http://www.abc15.com/content/realestate/story.aspx?content_id=991a23bb-8677-48ca-b782-b491f90e4de6&rss=704)  Only time will tell if Phoenix is starting to turn the corner.

So should buyers wait to purchase a home in the Prescott area in hopes of getting a better deal late this year or in 2009?  The answer to that question will depend on a number of factors.  I will be discussing the subject in detail in an upcoming blog.  Generally, though, this is a Buyers Market, and they are the ones calling the shots.  Sellers are either motivated to sell, or they are not.  There are great deals to be gotten on certain homes in the Prescott area, if the seller is motivated.  So the bottom line is this:  one could negotiate a great deal now (say 10% below market) or wait til next year in hopes that Prescott housing prices will fall another 10%, in general.  (Prescott median home prices fell 8.6% last year and have fallen 2.7% thus far this year. (The last time Prescott saw a decrease in home prices was back in 1997.)  Will it be worth the wait?  That will depend on your individual circumstances, and I will give you several things to take into consideration in my next blog.

What’s the weather like in Prescott?  I hear this question frequently from folks looking to relocate to Prescott from another state.  Of course the answer is going to somewhat relative, but the description of “mild four season weather” is typically used to describe Prescott’s climate. 

Since I grew up in the Colorado/Kansas/Nebraska area, I find the Prescott weather very, very pleasant.  Outside of some windy days in the springtime, I would pretty much describe the weather as an almost perfect mix of “not too cold in the winter” and “not too hot in the summer”. 

The lack of humidity in Northern Arizona definitely contributes to our comfort level.  If you’ve ever lived in an area with high humidity, you know how uncomfortable that additional dampness can be.  It makes cold weather seem colder and hot weather almost unbearable.  In Northern Arizona that lack of humidity means that even in the summer the nighttime lows will be in the upper 50’s and low 60’s, even though the daytime high may have been close to 90°.  That same low humidity also means that only a sweater or light jacket is needed when our winter temperatures are in the 50’s. 

My favorite season in Prescott is “monsoon season”, which basically runs from about the first week of July through mid-September.  This is our “green” time of the year as it rains almost daily.  However, this isn’t dreary rainy days one usually associates with the “rainy season”.  Rather, the monsoons are brief daily showers that last about 30 minutes.  Sometimes the rain will be a downpour accompanied by thunder and lightning.  Other days it will be more of a light shower.  And sometimes the sun even continues to shine during the rainstorm!  If you’ve ever experienced an afternoon mountain shower while visiting the Rockies, then you’ll have a pretty good idea of what “monsoon season” is like in Prescott.  The two great benefits of the daily rains – green grass and a temperature drop of about 10° to 15°.

Winter in Prescott is fairly brief and relatively mild.  We do get an occasional snowfall, which usually melts as it hits the ground or within a few hours.  Daytime highs are typically in the 50’s, although we may have some colder days in the 40’s and occasionally a few 30’s.  Nighttime winter lows are usually in the upper 20’s, but we can get a cold snap for a day or two with temperatures in the teens.  We usually don’t see snow until December, and our winter is pretty much over by the 1^st of March when temperatures will be back into the 60’s by mid-month. 

If you’re thinking of relocating to Prescott, please visit often at various times of the year.  And be sure to plan a trip during summer monsoon season.  Take time to enjoy an Arts & Crafts fair at historic Courthouse Square in the late morning or early afternoon, and then have dessert in one of the neighborhood cafés in the afternoon as you watch a monsoon shower pass over Prescott.

I know you’re thinking that’s a very odd question.  But listing your home and selling your home are not necessarily synonymous.  Unfortunately sometimes agents and sellers don’t figure this out until a lot of time, effort, money, and frustration have gone into trying to sell a house where the owners really only wanted to “list” the house. 

Especially in the current slow real estate market, it takes more than just “listing” a house to get it sold.  A homeowner may sincerely think he wants to “sell” his house, but the reality may be that he really only wants to “list’ his house.  What do I mean? 

To sell a house in today’s market takes a genuine commitment to the process and a willingness to “do what it takes” to get the house sold.  Too often homeowners want to sell their house, but only if they can get their dream price.  Of course, to the homeowner the price is a very reasonable price, especially in view of the quality upgrades, the tasteful décor, and the pristine condition of his home.  Unfortunately, to the few buyers in the marketplace right now, the home is passed by in favor of many similar homes priced $1,000’s of dollars lower. 

The seller and his agent may find that even with extensive marketing, there are few or no showings of the house.  His agent may reluctantly suggest a price reduction to bring in potential buyers and make the house more competitive.  Keep in mind the agent has gone into this listing agreement thinking that the seller wants to “sell”, and although the seller has chosen a price that’s at the high end of the comps, the house is nice and the agent hopes that the one buyer who will love this particular house will walk through the door.  This thinking is sometimes the result of being overly optimistic but is more often the result of inexperience or a desire to “have more listings”. 

When a price drop is suggested is where the level of motivation of the seller becomes apparent.  Sometimes we agents hear comments at this point like:  “We’ve been giving it a lot of thought.  We really like our house (or neighborhood, or Prescott).  We’d like to move to [someplace else], but we do have the option of staying here.  I guess we can go ahead and lower our price $5,000 (or $10,000) but that’s really as low as we can afford to go and still get what we need out of the house.”  Unfortunately without a real focus on “getting the house sold”, the chances the home is going to sell are very slim.  

In this marketplace, it takes real commitment to actually get a sale, not only on the part of the homeowner but also on the part of the agent.  It takes teamwork.  And it takes aggressive marketing and pricing.  This is one reason why I never try to “buy” a listing, telling a homeowner the listing figure I think he wants to hear.  Call it “tough love” if you will, but agreeing to list a home at a too high price only leads to frustration and lost dollars for both of us.   

Chasing the market down in a declining market is sure to net the seller less in the end than pricing aggressively at the outset.  Think about it, if prices are falling a home that is worth $300,000 today, may only be worth $275,000 six months from now, and maybe only $250,000 a year from now.  If a seller wants to price his home at $335,000, he starts off $35,000 over market.  The agent thinks that with good marketing perhaps she can entice buyers to take a look.  Alas, the seller will have very few, if any, showings.  If he lowers his price $10,000 in six months, he’s now overpriced by $50,000.  Now he gets even fewer showings, despite the $10,000 price drop.  At this point the seller is discouraged, and the agent is tired of spending several $100’s a month in advertising.  It’s very common at this point for a seller to take his home off the market for a while, hoping to come back on the market fresh next spring.  So next spring rolls around, and the seller really does want/need to sell as soon as possible.  Unfortunately, he’ll now need to price his home at $259,000 or below to get it sold relatively quickly at $250,000.  Do you see how the seller has lost $50,000 by not pricing aggressively at the outset?  Even at this point, however, the seller is better off doing what it takes to get it sold.  I have actually seen sellers repeat the above scenario of listing, withdrawing, relisting several times before they finally realize that they’ll need to price aggressively to get the house sold in a slow market.  In the end, these sellers may end up losing as much as 15%-30% of the initial value of their homes.  And needless to say, there is usually more than one agent in the process who loses a substantial amount of money on marketing costs when the home fails to sell. 

While it may be painful to hear the truth about agressive pricing at the outset, it will hurt your wallet much less in the long run.   A seller interviewing me will find that I am always upfront and honest.  I will give you the facts about the real value of your house and explain how we will work together as a team to sell your home.  The decision is yours.  I’m not about high pressure tactics or promises that can’t be delivered.  We go into the sales process as a team with a “game plan”.  If you are truly committed to selling your Prescott area home, please give me a call or contact me at Gretchen@MyPrescottHome.com for an honest pricing evaluation.  And remember, there’s never a charge for my evaluation and comprehensive market analysis.     

Okay, I admit it.  I’m a huge HGTV fan.  Since I love to remodel and decorate I enjoy shows that focus on style and color.  But as a real estate agent I really get a kick out of shows like “Sell This House”, “What You Get for the Money”, and of course “House Hunters” and “Designed to Sell”.  While many aspects of the shows are a far cry from the reality of real estate in the real world, there are still some good tips that home sellers can glean that will help them improve their chances of getting a relatively quick sale in our slow market. 

Let’s take “Designed to Sell” as a case in point.  Here are some lessons we can learn from the show and what Buyers generally like to see in a home:

•  Open floorplan with a nice “flow”.
•  No overpowering colors (although occasionally a bolder color which accents a focal point of the home can give a house that “wow factor”)
•  A clean, clean, clean home.
• Curb appeal that makes buyers want to tour the inside.
• Updated flooring, bathrooms, kitchens, and lighting. 

From my personal experience in working extensively with buyers, I can attest to the fact that just like “Designed to Sell” emphasizes, first impressions do mean a lot.  Buyers will often make a snap decision about whether or not they like a house the moment they walk through the front door, sometimes rejecting the house with a vague comment like, “We’ll know the right house when we see it,” or “This house just doesn’t feel right.”   These comments often come from the very same clients who tell me they have a good imagination and can look past the negative (such as weird paint colors, dated wallpaper, or stained carpeting).  The fact of the matter is, however, that usually they cannot envision anything other than what they see.  It is truly the rare person who can imagine the full potential of a property. But now, back to “Designed to Sell” and what you don’t learn from the show:

• Quick fixes that are cheap often look that way to a buyer, too.  (Painted appliances, painted fireplace surrounds, and faux tiles are examples of “improvements” not to do.)

• Open houses don’t sell houses.  In the Prescott area, it is very difficult to get even two or three guests to attend a heavily advertised Open House, so I really enjoy watching the parade of people who supposedly attend the “Designed to Sell” open houses.  (If you look closely, you can almost pick out the homeowner’s Mom and Dad and the Sister and her family.  Sorry but it appears that not only is the home staged, but the Open House is, too!)

• It takes more than just staging to sell a house.  It also takes a proven pricing strategy as well as targeted marketing, too. 

Bottom line for a relatively quick sale in a slow market:  A combination of an ideal price, coupled with marketing that will attract buyers to tour the home.  Once the potential buyers are through the door, then it’s all about how well your home shows compared with the other homes the buyer will be looking at.  If you’re contemplating selling your home, you need to keep in mind that there are currently more than 3100 homes for sale in the Prescott MLS.  As of 1^st Quarter 2008, about 150 homes were selling each month, so that equates to approximately a 1 in 25 chance that your home will sell in the next 22 months.  Therefore, it’s very important to make every buyer’s first impression of your home really count!

We home stagers are fond of reminding folks of a couple of advantages to be attained by having a home staged before placing it on the market. We mention that homes which have been staged usually sell in a shorter amount of time than the competition which has not had the advantage of staging. And, home stagers talk of the monetary gain to be had by home sellers who take advantage of the opportunity to hire a professional home stager to assist with preparation of merchandising the seller’s property.                                              

Let me explain these principles a bit further. There are certain ranges of price which any given property may be able to be sold within. Say that house A is within the $250,000 to $275,000 range. For comparison sake we will assume that house B is also within the exact same range. All things being equal, if house A is staged and house B is sold “as is” then it is more likely that house A will sell more quickly and closer to the $275,000 mark. With house B left unstaged it may take longer to sell and the very real possibility remains that chasing the price downward with length of time on market will place house B in a different price range. It could be after months on the market the acceptable price range for house B would now be lowered to $225,000 to $250,000.

Another part of the listing price principle during this buyer’s market phase in the real estate world is that no matter how good the staging or how poorly a house shows neither house A nor house B above is likely to sell for $300,000.

As a home stager, my job is to improve the marketability of the property owned by my clients. What that translates to is that if your house is in the $250,000 to $275,000 after staging your property moves up the range. What is important to keep in mind is that no matter how good the staging is, in today’s market there is not much chance the window of the pricing possibilities will be exceeded.

Bottom line, if your agent shows you the comparables and brings her knowledge and experience of the real estate market to your listing appointment, tells you the range you are likely to be able to sell your house within, advises you of ways to best show your property and you still choose to list above the likely selling limits then home staging will not be of much (if any) help to you.

Even if you followed all the suggestions, recommendations and directions given you by your home stager of choice there wouldn’t be much chance of selling if you choose to ignore the advice of your real estate agent when it comes to price.

If it is time for you to join in the game of “Sell This House,” then you must remember that you can’t even get to first base if your merchandise (your house) is overpriced.

Information provided by Yvonne Root of rooms b.y. root. Find the home staging team from rooms b.y. root helping to prepare properties for sale in Prescott, Prescott Valley, Dewey-Humboldt, Cottonwood, Camp Verde, Mayer, Cordes Lakes, New River, Black Canyon City, Anthem, and surrounding communities in Yavapai County.