Michael Dale’s Orlando Real Estate Market: What we can Control…
By Michael Dale - Vice President, Dave Brewer Realty, Inc.
Wow, given the recent dramatic economic events where do I begin; the stock market, the mortgage market, the secondary mortgage market as represented by Fannie Mae and Freddie Mac?
Each of the aforementioned have so overwhelmingly impacted our economy let alone our housing market. Many I have conversed with this past week are angry and frustrated. These institutions are so mammoth and to most of us represent entities that we can’t touch let alone think of impacting or affecting change upon. And then when you add the additional frustration our Senate and House have exhibited whatever your political position may be we as citizens feel even less able to do anything but stand by, watch and wait to see what happens. Certainly many of us feel that we have lost complete control over our own individual economic destiny and wonder when the next shoe is going to drop.
Remember that saying, probably your grandmother or mother made you aware of: God grant me the serenity to accept the things I cannot change; courage to change the things I can; and wisdom to know the difference. It is the Serenity Prayer. Clearly this is one of those times we should really take that sentiment to heart. Of all the issues that we are being bombarded with knowing and focusing on those things we can control will probably go a long way to easing some of our anxiety and possibly instill a sense of calm.
Focus on what we can control and not that which is out of our control. This sentiment has significance on our housing market in particular for those of us that for whatever reason have or need to place our homes on the market. And the Serenity Prayer has significance for those of us in the real estate business when we find ourselves discussing the possibility of listing a clients’ home in this market. There are very specific things real estate agents and sellers can control when putting a home on the market.
The foremost is pricing the property correctly in this market. With so much inventory continuing to exist on the
market and so few buyers a quick look at a home’s price on our Multiple Listing Service (MLS) can determine the home’s price per square foot and typically determine what the owner paid for the property when originally purchased. Any appearance that the property is overpriced from these two metrics will quickly send the prospect on to the next home typically without even a visit. And our agent population is likewise guilty of taking over priced listings instead of honestly conveying to the owner the house will never sell at the owner’s desired price thinking that we can talk the owner down after the listing is acquired. When these over priced listings come on the market they perpetuate the continued decline of our home values and exacerbate our recovery potential. Even if agents are successful in gaining agreement from sellers to continually lower the listing price we perpetuate the habit of buyers who wait until the home is finally priced at what they would consider market pricing. Hence the realtor’s industry average days on market (ADOM) remains at 113 days for two months in a row.
(See Table 1: As in past articles I am providing Orlando area housing statistics with a sample of previous months and years to convey a historical reference point for what has and is transpiring with our housing market.)
Listing at unrealistic pricing expectations also prolongs our inventory supply and maintains our current 18 month supply of homes. When our supply of homes starts trending down towards 6 to 8 months of supply we will know we are at normal market supply levels and we might then see a return of modest and nominal pricing appreciations.
So, if you are a seller currently listing or thinking of listing your home in this very challenging market please focus on what you can control and price your home correctly.
If you don’t feel comfortable with the agent’s advice on pricing then make the investment in an appraisal. An appraisal has much more validity in marketing your home than an agent’s CMA (competitive marketing analysis) and is widely recognized as a better justification for your home’s market value. A buyer will want an appraisal anyway so why not get out in front of the power curve and find out the market value of your home. You can save yourself time, money and frustration by determining now, not after a contract has been offered, that the price you have negotiated with a buyer is going to be acceptable to the buyer and the buyer’s mortgage company. Many purchase contracts will require that the appraisal price must meet or exceed the purchase price. So setting the appropriate listing price can shorten your negotiations and even the closing process.
And our agent population must seek to honestly advise potential listing customers what the perils are when pricing a home incorrectly. No service is done for the listing seller, the potential buyer, the agent nor the real estate industry by knowingly taking an over priced listing. As agents and brokerage firms we just spend our advertising dollars on a home that won’t sell and set a false expectation level for our clients. Listing price is a very specific element we can control and must. Correctly focused on and implemented we might even shorten the sales cycle and begin to reduce our inventory and lessen our recovery time.
So as listing customers and real estate agents we must focus on what we can control and we can control our approach to properly pricing our listings. We might even make our mother and grandmother proud of us!
