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When Is It Time to Reduce the Price of Your Sacramento Home?
If you ask some listing agents when is it time to reduce the price of a listing, they will say never. Agents are famous for repeating a home should be priced right to start with. But sometimes it is not possible to price the home correctly. For a large variety of reasons. It could be seller expectations, condition, location, upgrades or lack thereof, or an unusual way a buyer reacts over a small undetected defect. Or, market shifts. Or a fluke comp happened and sold only due to luck of the draw.
I could keep going with what I’ve observed over the past 40-some years in real estate.
Obviously, if we’re selling a suburban tract home — any Mediterranean stucco style built within the last 20 years — it’s fairly easy to price. We can find exact model matches or close enough for government work, heh, heh. But not every home is easy. And some homes take 6 months to sell regardless of the price.
Further, unlike many agents, I rarely refuse to market a potentially overpriced listing. I seriously try to maximize seller profit potential. Sometimes comparable sales will support a higher price as well yet we can’t always accurately judge buyer reactions. However, if an agent has done everything humanely possible to attract an offer and no offers are the result, then it is time to reduce the price.
Below is my estimated timeline for price reductions on average to sell homes in Sacramento. Again, though, it’s not cast in stone. It is all dependent on the area and how long it takes on average to sell the homes there. Especially since all real estate is hyper local.
Within 21 days, if there are no offers, it is time to reduce the price or at least begin a conversation about it.
Definitely again at the 30-day mark. time to reanalyze market competition, especially if the seller did not reduce the price at Day 21.
Every 30 days thereafter.
Another strategy is to decide whether you should reduce the price or reset the days on market, coupled with a price reduction. If we reset the days on market, even though cummulative appears, a price reduction is not always evident. Sometimes you want buyers to notice the price reduction and sometimes you want buyers to instead get excited over a brand new listing. Or both.
Why Selling Sacramento Homes to Neighbors Can Be More Difficult
Selling Sacramento homes to neighbors can sometimes mean lower values.
The longer I’m in the real estate business in this town, the more I see why selling Sacramento homes to neighbors can be difficult. For starters, let’s say the neighbors already own a home. They want to sell and buy a bigger home in the same neighborhood. Of course, when their home goes on the market, it’s worth a lot of money, so much money that even Trump would have a hard time describing how much money that home is worth, and if he isn’t the worst liar in the world I don’t know who is. I got a big kick out of Jack Ohman’s editorial cartoon yesterday: excuse me, I have to take this call from Winston Churchill, heh, heh.
I’ve been so busy selling homes that I haven’t paid attention to the value of our own house. Like the shoe cobbler’s kids going barefoot. A lender appraised our home in Land Park yesterday for more than double its original sales price. My immediate reaction was we need to dump this house and move out of the state. Which is what we did the last time this happened, now that I think about it. The problem is there are not very many places we can go to in California that will allow me to continue selling Sacramento homes. So I think we’ve gotta stay put.
It got me to wondering, though, how many people would buy back their homes at today’s values? Would you, if your home suddenly doubled in value? Would you buy your neighbor’s house if it were similar? See, I’m finding that selling Sacramento homes to neighbors is a lot more difficult because they live in the neighborhood. They are too close to the way things used to be or the way they think things are. It’s a commonality that prevents some neighbors from seeing value.
Almost every time that I receive a lowball offer from some potential buyer, it’s a neighbor. Somebody who doesn’t see the value in the home. And then invariably we sell to a buyer from another neighborhood, possibly a buyer who wants to move up into an area they perceive to be better. All those reasons that make a certain neighborhood more valuable than another, like, say, conforming homes, better school districts, pride of ownership, desirable location, those things are readily recognizable by a buyer from outside of the immediate vicinity but not necessarily afforded a lot of credence by those who live there.
Perception often lies in the eye of the beholder, yet even if you’re Donald Trump, it doesn’t alter facts. It’s a challenge selling Sacramento homes in this market because of low inventory, as readily available comparable sales might not be present over the past 3 months. To determine value, you’ve got to rely on principles of substitution, and not every agent knows how to compute those values. They are trained to look in a half mile radius and if they can’t find a comp, they give up.
I recall a sale in Davis for about $1.5 million a while back, and all the agents I spoke to in Davis said it could not be done and the value was not there. When I sold that house at list price, they wanted to know if it was a neighbor who bought it because no such neighbor would do such a thing. Yet, it sold for cash. To a buyer who recognized the value. A buyer from the vicinity but not directly in that neighborhood. I saw the same thing happen with a couple of luxury sales in Riverlake, too. It’s like some close-knit communities seem too close.
Just throwing it out there for consideration. Just because a neighbor can’t recognize value doesn’t mean it doesn’t exist.
How This Sacramento Realtor Wins Listings Without Listing Presentations
My listing presentations are conversations about Sacramento real estate.
Over the past week, I’ve been on 6 listing presentations all over Sacramento. I call them listing presentations but that’s not really a true sense of the term, not in the way most Sacramento Realtors perform that sort of function. I prefer to think of these visits as a conversation with a seller, including my agent visual inspection. It’s really all about two things: the sellers, what they hope to accomplish; and the sellers’ home, its desirability, condition, presentation and price point. Well, it’s also a little bit about me, but I don’t launch into my life story or anything.
I possess no script. I bring no presentation materials. No software program or video to bore anybody to tears with. I don’t haul in vanity signs and say lookit here, my picture on the sign, how cool is that? I do not advertise on billboards nor bus benches. My approach is always relationship based and educational. It’s very different than how I hear how other agents conduct listing presentations. Sometimes I even forget to leave a card until I’m walking out the door.
Out of the 6 visits with sellers, I expect to list 6 properties. Not all at the same time, of course, but it would be OK if I did. Well, one is a divorce, so it could take up to a year for that Midtown 5-plex. I tend to put a lot of work into my listings upfront. Making sure there are no title discrepancies, the property is clean and presentable, the timing works with the present market conditions. I often agonize over marketing comments. I carefully choose among high definition photos. And each listing is unique. No two are alike, and I don’t treat them in that manner. Each is my personal project.
When I came home from the last of my listing presentations on Saturday, my husband asked what price did we settle on. Price? We didn’t really talk much about a price. The home in Glenbrook was much nicer than I had been expecting, so to be completely accurate, I needed to do a bit more homework. To my amazement, the sellers hired me anyway. On the spot. They had another interview with some other Realtor scheduled for Saturday afternoon but they decided after our chat that I was the agent for them. I was ready to let them have that other interview, but hey, they gave me the keys. I’m their agent.
Perhaps it’s because I explained the present market, talked about what I will do for them, but primarily, I think it’s because I “get” their home. I know what makes it special. I appreciate its qualities. I will do a good job for them, and they have confidence in me. It’s sellers like this who make me want to be the best Sacramento Realtor I can be.
And it just goes to prove Realtors are not required to do formal listing presentations to win a listing. You just have to be yourself. Forget the graphs, the charts, the mounds of paperwork, the gimmicks, the crutches. Talk about what you know.
How Not to Flip Your Sacramento Home
Can you make $100,000 profit on a Sacramento home you bought last summer and flip it? To clarify the answer further, let’s say the home was purchased at market value, the price at which most homes in Sacramento sell. Forget about the fact that the home abuts a gated community, and it’s not actually located in the gated community but instead is situated on a busy street with traffic. The caller wanted to know if she could make $100,000 profit, darn it, she wants to flip. Flipping the home is her goal because she and her husband no longer want to own this house.
Why don’t they want to own the house they bought only last summer? Because the work commute to San Francisco is too long. The sellers underestimated how gruesome it would be to drive 2 hours each way every day to go to work. So, now it is imperative that they make $100,000 profit and dump what they view as a bad decision. They’ll just flip it. They watch cable TV.
I tried to explain to the seller — without looking up the sale of her home or anything about it — that our market experienced its big appreciation in 2012. The first half of 2013 brought more appreciation and we saw another leap. But we’re pretty much done jumping around at the moment, and the market has been fairly stable since last July. I wondered what she thought would make her home worth $100,000 more than she paid for it, plus the costs of sale to flip it.
To get the answer, I go where I usually go when I’m looking for horribly bad property information that is widely available to the unsuspecting public — which is Zillow and its Zestimate. Believe it or not, this time Zillow wasn’t that far off on value, maybe by only $20,000, so it wasn’t Zillow’s fault. I pulled up listings in MLS to see what else was for sale in her neighborhood because sometimes it’s another home for sale in Sacramento that makes sellers think they can get more for their home. Hey, it’s down the street and on the market . . .
They don’t always realize that people can ask whatever they want. They stick any old price tag on it and find a real estate agent who is willing to list that home for sale. Sometimes, believe it or not, that Sacramento real estate agent could even be me as I don’t always turn down overpriced listings with potential — because those homes could sell someday for less, and I’d like to be that agent when they sell. It’s not my home. I do inform my sellers if I believe the price is too high, but it’s always their call because it’s their property.
Sure enough, I found a home for sale that is listed at about $100,000 more within a half-mile radius. It has a ton of upgrades. Quiet street. Nicer location. Bigger property, single level, and in fact wasn’t really a comparable sale at all in the world of Sacramento real estate. The potential seller who contacted me had a solution for this though, she could put in $50,000 to remodel her home and then she could make $100,000. Is she a professional flipper? Don’t think so.
And this is what HGTV has done to the minds of otherwise normal people.
The difference between me and the other two real estate agents she called? I talked to her. But my name would be mud if I encouraged her, and that’s just not the right thing to do. It means I won’t get the listing, but that’s how it goes.
Think About Selling a Sacramento Home When Buying
One of the biggest fears sellers often harbor about selling a Sacramento home is what if it doesn’t sell? They have those fears because they are not in real estate. When you’re in real estate, like this Sacramento real estate agent, you know that anything will sell if the price is right. Even a flooded-out house with mold the size of basketballs will sell. And yes, I’ve sold a lot of those types of homes, too.
There are a variety of reasons why selling a Sacramento home might take longer than usual to sell, though. These are sometimes the reasons that some sellers don’t want to hear because they are reasons the sellers should have thought of before they bought a home. I often tell people that the time to think about selling a Sacramento home is when you buy a home.
Maybe it’s in a bad location. You know, location, location, location is what drives real estate. Maybe there’s something about it that other homes have and yours does not. I ask buyer’s agents who show my listings to give me buyer feedback. From feedback I hear about things we can rectify. If we can’t rectify those things, we can adjust the price to account for it.
It’s difficult to explain to a seller that she bought the wrong home or paid too much, but I do try to get that point across if it is true. It is often true. Especially in certain neighborhoods in Sacramento, it’s easy to buy the wrong type of home in the wrong location.
Or, we can wait for the buyer who is just like the seller of any other beautiful home in Elk Grove. Because the seller bought this home for a reason. That is most likely the same reason a new buyer will buy it. Nobody is that unique. A buyer will appear, and we will reel ’em in.
There is a buyer for every home in Sacramento. If this agent is listing and selling your home, you can count on it.
