Buyers’ expectations of value in today’s market
In Snohomish County this last two years has been a long winning streak for homebuyers. Yet some high, closed sold prices occasionally surprise us.
Why do a few sales seem substantially more than what statistics would have indicated? (Not an immeasurable $5,000 or $10,000 but $25,000, $50,000 and more. And for purposes of this column, we’re not considering those rare cases where multiple offers raise the sales price after only a few days on market.)
There are three possible explanations for a home to sell for too high a price:
The seller would not take less, buyer fell in love with ‘that’ house.
There’s no good time for buyers to lay financial reason aside, but even more so in this economy.
In Snohomish County, there’s currently about a 5.2 month supply of residential listings and that, without the inevitable surge of new spring offerings.
By economists’ standards, that’s a fairly balanced market, but still favors buyers. So if nearby sales belie the asking price – wait. Let it go, find another. Buyers should not pay (a substantial amount) too high in this market.
The buyer represented themself.
There are many buyers using the services of discounters, in essence representing themselves. Confident they can figure out what to offer, they over-shoot the mark. Their discounter will write up an offer in unfamiler territory for whatever the buyers want to offer.
Lower than the asking price without knowledge of nearby sales, that could still be too much.
Sale information is available to everyone with some investigative work. If you’re buyers going that route, ensure your investment you do the work. Zillow is a good place to start with all their gathered data.
The buyers were represented by an unskilled or careless broker.
Buyers create their on impression of value based on homes they see. But true value is determined by what’s not seen: SOLDS.
Buyers should be given (or ask to see) several reports: “Pendings and Solds” nearby and “Property History” for the house they’re considering.
(Not a verbal ‘On market a few weeks’ – when in truth it’s four months!).
It takes, oh... about 20 seconds for a broker to print these out. And that’s only a part of the investigation that brokers should undertake to guide their buyer in establishing a fair value for a desired property.
If your broker states “I’d be embarrassed to present an offer that low” – find another broker!
That broker should be embarrassed to have a buyer paying too much in this market. List Price (aka asking price) often has little relationship to the final sales price.
Last year in Snohomish County it was not uncommon to have 10 months + on market and sales prices varying wildly from the original list price.
( i.e. List: $650,000-- Sold $400,000; List: $2,050,000 Sold $1,100,000, etc. –these were not short sale or pre-foreclosure properties.)
In this market, all listing brokers are sometimes just as clueless as our clients as to the final sale price of our Northwest eclectic listings or we’re sometimes tied to our sellers’ memories of past tax valuations – which have rapidly altered.
Paying above today’s fair market value wasn’t a problem prior to 2007; prices were historically increasing. That is no longer the case.
Dropping values are slowing, for now. But if you pay substantially (key word) too much and circumstances demand you sell – well, there’s a saying about being without a paddle, which applies.
In Edmonds, Mukilteo, Everett and surrounding areas, we’re all celebrating Boeing’s success on the recent tanker contract. That may equate to an active housing market this year, but keep in mind: the Boeing contract doesn’t make your house worth more.
Find a REALTOR you can trust; there are 2,963 brokers just in Snohomish County alone. Get referrals. Do your “home”work. Don’t pay too much or list too high in a soft, still slightly leaking market.Elizabeth Erickson is owner and designated broker, Gallery Homes Real Estate. Contact her at HYPERLINK "mailto:firstname.lastname@example.org" email@example.com or at the office: 425-212-4300 or direct: 425-508-1405, or go to HYPERLINK "http://www.galleryhomesre.com" www.galleryhomesre.com.