Selling Fast in a Down Market

Selling quickly in this market can be very difficult. But it can be done. I did it this week once again. 3 weeks -- and we got nearly full price.

The key is to know your competition in the neighborhood and value your comps differently.

Right now, the inventory is so large, and there's so few buyers. To sell QUICKLY, your home must stand out. The No. 1 way to make it stand out is price. When there's too many homes on the market, price trumps all. Everybody's looking for a bargain.

To do this, you must have a seller who not only wants to sell fast, but is willing to look at comparable sales in a way that reflects the current market realities.

What do I mean? Two things.

First, in the case of the condo I sold this week in West Hollywood, recent sales suggested the condo was worth somewhere in the $370s. But there were already tons of similar condos available in that price range that weren't selling. If we had priced it around there, we would have had another condo that wasn't selling. Plus, we knew it was a declining market so we knew any recent sales were instantly outdated (see below). So we priced it at $349,000, where we were the only game in town. We got tons of showings, several potential buyers, and got nearly full asking price in this gloom-and-doom market -- and we did it in 3 weeks.

Second, we know that the value of a property is a completely fluid and an entirely relative thing. There's no one way to determine the "value" of a property. And in a market like this, you have to look at comps differently than you did in a rising market.

For example, if the market in a neighborhood is generally sliding at a rate of about 10 percent, you have to apply that 10 percent looking forward. And you have to do it twice. So, if recent sales suggest that your house is worth $2 million, then your house TODAY is really worth 10% less, or $1.8 million. Those sales were in the past. Your value is now 10 percent less. But it's worse than that, really. You aren't selling your house today, you're selling it in the future, so your value going forward is really 10% less than that, or $1.62 million.

Obviously, that is a very generalized view. And again, there's no hard and fast rule for how to look at a property. And I'm telling you this to sell your property QUICKLY. Yes, it stinks. But remember how this principal worked almost exactly in reverse when the market was rising. People who looked at recent comps, knew their property was already worth more than the old comps. And then they priced it even slightly above that -- and many times they got it! Now, the reverse is true.

Again, this is about selling QUICKLY. If you don't price looking forward, the result is usually that the home will sit and will have to endure several price reductions before you sell. If you're willing to wait, you can sometimes get more for the house. But sometimes you'll get less. It's a gamble. And it takes time. Again, this is general and does not apply to every property or every neighborhood in L.A.

7 REALTORS YOU SHOULD AVOID

1. Avoid Kitchen Sink Realtors
You don’t want a Realtor who will send you everything but the kitchen sink to look at.

2. Avoid Lazy Realtors
You don’t want a Realtor who’s never available or takes his time to respond to your requests.

3. Avoid Stupid Realtors
You don’t want a Realtor who you can’t have an intellectual conversation with.

4. Avoid Frenetic Realtors
You don’t want a Realtor who will panic and blow up a deal.

5. Avoid Part-Time Realtors
You don’t want a Realtor who’s not up on the latest twists and turns in the market or who doesn’t study the MLS.

6. Avoid Slug Realtors
You don’t want a Realtor who can’t pick up the nuances of negotiation and get you the best deal.

7. Avoid Liar Realtors
You don’t want a Realtor who will tell you what you want to hear just to make a sale happen.

The trouble with pricing

Like I've said before, in this market, pricing IS marketing, pricing IS strategy, pricing is not science.

You can't just look up some comps or jump on zillow decide what your house is "worth" and expect to get that. It just doesn't work that way. It actually never did. When prices were going up and property was hot, this kind of a tactic worked because there was such an eagerness to buy whatever was available. There was a lack of supply and an excess of demand. So any bad pricing was covered up by the seller's market.

Things are different now (see this recent L.A. Times story).

Now, you've got to look at much more than "the comps." Some of the things I look at include things like buyer activity at different price levels within a particular neighborhood. If we know, at what level more buyers are available, we may decide to price closer to that level. If we have a property that's priced substantially above what people are willing to pay in a particular neighborhood, we may have to expand the marketing campaign to take on some special strategies. Both strategies are about going where the buyers are. Because there's a lot fewer of them.

Psychology of Pricing

Ahh, the good ole days, when price almost didn't matter.

I'm not serious, of course. Price always matters. In fact, price is the No. 1 most important marketing factor in a property. But when things were going crazy in real estate in L.A. with few houses, many buyers, and multiple offers, price was not as important as it is today.

Today. Price IS marketing. Price IS strategy. Price IS whether a property is sold or not. Sales are slowing. Buyers are becoming fewer. A poorly priced property won't sell. A well-priced property will sell -- but it may take some time. Only, a property with a very ATTRACTIVE PRICE will sell quickly. That's the reality of a buyer's market. And here's a great primer on pricing:

NY Times: The Psychology of Pricing