Market Sets Your Home's Value - And You May Not Like It

Yet another article regarding pricing your home. We just can't stress proper pricing enough!

Market sets your home's value — and you may not like

By Mary Umberger
Chicago Tribune

Here's one of those glass-half-empty/glass-half-full bits of news: Online company househunt.com recently surveyed real-estate agents and concluded that 51 percent of U.S. home sellers are getting 95 to 100 percent of their asking prices.

You can look at that glass as half-full because, well, about half seem to be hitting their target.
But then there's the rest of America, where weeds are popping up around the for-sale signs.
During the housing boom, selling your home for 95 percent (or better) of your asking price became something of an icon — a reliable, reasonable goal. But as the market has cooled, "asking price" has become a moving target.

How much is a fair price, anyway? A response from the glass-half-empty camp might sound like the late cartoonist Jeff MacNelly's parody of how the Internal Revenue Service determines how much tax you owe: How much did you make? Send it in. That is, no matter how certain you are that your home is worth a specific figure, there's a good chance that it will turn out to be less in today's climate.

"The old, easy model [for pricing a house] is to look at the computer to see what sold last year and add 5 percent," said Stephen Baird, president of Baird & Warner Real Estate in Chicago.
"That model doesn't work now." Baird said that coming up with a figure has become less an exercise in math than an exercise in group-think for agents.

"We get the office together and price the property," he said. "It's much more of an art than it was a year ago." Brokers, agents and people trying to sell their homes on their own have said that starting out with the right asking price is akin to being told to shut up and eat your spinach.
"You have to look at what is actually selling in your price range right now," Baird said. "That determines the market. "The period of time you look back at now [for sales prices of comparable properties, or comps] is three months. Anything over three months is not a good comp now."

Even the economics-impaired can grasp this concept: Your home (or your car or your collection of Mark Foley campaign posters) is worth only as much as someone will pay you for it. Today.
Or, as Baird put it: "The market is going to tell you what a house is worth. You just may not like what the market says."

"If you want to sell your house against the 20 other properties that are like it, you have to get aggressive on your price," Baird said. "Out of that 20, somebody will step out from the pack and price it more aggressively, and it will sell."

Lest we end this chat on a negative note, here's a reminder of the cyclical nature of real estate: If you're a seller and you have the luxury of time, conditions are likely to improve.

"People are sitting on the sidelines waiting to see what happens with pricing," Baird said.
"The nice part about this business is that demand doesn't go away, it just gets put off.
"If somebody isn't going to get what they want, they're going to wait until next year."

Copyright © 2006 The Seattle Times Company

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