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Some experts say that the tables have turned, and the valley's real estate market has once again become a buyer's delight. Others say, "Not so quick," that the market could easily rebound. So, how does a seller decide on an asking price in such a volatile climate?
"There is no magic number," says Mary Prieto, a Realtor with Prudential California Realty's Modesto office. "Rather, it's a combination of things."
Included in Prieto's approach is studying the homes currently on the market and what comparable homes in the area have sold for in the last three to four months. Then, she takes about five percent off of that average to come up with a price.
"You want to price yours lower than everyone else's," she says, adding that this can be a good way to drum up interest in a slower market.
If a house is priced low, it can get bid up, receive multiple offers and start a bidding war. Prieto likes to remind her more aggressive sellers of this when they argue that they are "giving the house away" at a low price or that the market could rebound. "I tell them that the ball will always be in the seller's court, because the price can always go up," Prieto says. Sellers who are cashing out and taking their money out of state usually are the ones who argue against a lower price. In general, sellers who plan on re-entering the local market have a better understanding of the buyer, Prieto says. "They know, because they are going to be in the same position in a short time."
Prieto wants the homes she lists to be in great shape before they go on the market. "That first 30 days are crucial," she says. In addition to heavy marketing, Prieto also has her sellers' homes staged or decorated as part of her fees. "I wouldn't sell a house any other way," she says. "Every single one, even the vacant ones, gets some degree of staging."
When a house is priced too high and just sits, Prieto says that the only way to go is down. Nothing else is going to entice buyers enough to make an offer in such a "price-sensitive market," she says. "When it gets down to it, it's all about price. Once the house is on the market for 30 days, it means that the market has rejected the price."
In addition to price reductions, today's buyers are also seeing a lot of new inventory, according to Larry McDonald, a Realtor with Keller Williams Realty in Modesto. "After the massive rainy season, a lot of houses are just coming on the market," he says. "There are all of these homes that have flooded the market."
McDonald won't speculate on whether the market has turned. But he has seen some "panic pricing," sellers getting nervous and pricing their homes too low. To calm his clients' fears, McDonald reminds them that current mortgage rates are still quite attractive by historical standards and won't keep buyers away. "I can remember when rates were at 13 to 18 percent," he says. "We have been blessed with a good market."
McDonald works as part of a team with his wife, Debra McDonald, also a Realtor with Keller Williams. "We look at ourselves as consultants," he says. Much of what the McDonalds spend their time doing is researching the market and educating their clients. "It is important to go in with a realistic price," he says. "I have to get my clients to understand that, and that is very difficult."
Almost every client has a friend or family member who sold "a similar house" with similar square footage for a great price. Often, they expect to get the same price. What they don't notice are the differences, says McDonald: "the new paint, new carpet, new hardwood floors, marble and granite countertops, and new lighting in the other house."
Rather than go over past sales, McDonald prefers to focus on current trends. "What I want to talk about are the most recent pendings and the most recent solds," he says.
One way McDonald finds out why a certain home might not be selling is through informal surveys of other agents. "I'll call the agents who have viewed my properties," he says. "That way I get a global response. I ask what potential buyers thought and why they didn't put in an offer."
He also often has his own client look at the home from a buyer's perspective.
"I say to them, 'Let's go back and look at what your house looks like when you drive up. Maybe it's time to re-sod the lawn."