The new rules of pricing your house for sale
November 3, 2010 by RONALD E. ROEL. Special to Newsday
When the housing figures are released each month, many consumers are faced with a profusion of confusion. Existing home sales are up slightly – no, they’re down again. Median prices improved slightly over a year ago – wait, that was last month. New home sales dropped sharply after the federal tax credit expired, but they’re up again – for now.
Well, one thing’s for sure: It’s a whole new game of “The Price is Right.” Long gone are the halcyon days of setting your asking price by looking at comparable home sales over the last year – and adding 10 to 20 percent to those prices.
“There’s a new mindset of austerity,” says Jonathan Miller, president of Miller Samuel, a Manhattan-based appraisal firm that produces closely watched quarterly reports on the Long Island housing market. “You need to price within a few percentage points of what your house is worth. You can’t just put down a price and see whether you get a bite.”
Still, many sellers remain stuck on what their house was worth at its peak, three or four years ago. “They see anything off the peak as a loss,” Miller says.
While most experts agree that the housing market is still struggling, predictions vary on when things will start to turn around.
“We’re coasting along the bottom,” says Bethany Marten, owner of the Home Buyers Resource Center in Baldwin. Marten notes that while many new foreclosures are still coming on the market, many buyers are now willing to pay the full asking price for those properties. “When I see good properties in foreclosure selling for over the full price, that’s when I know the bottom has been reached,” she says.
In recent months, prices seemed to have stabilized somewhat. The median September sales price for Long Island was $370,500, eking out a 2.2 percent gain over the previous year.
But local price trends varied widely, according to a report from Realty Connect USA, a Woodbury-based brokerage. In Nassau County, for example, average September prices fell in 34 communities compared to a year ago but posted gains in 25 communities. In Suffolk, average year-over-year prices dropped in 63 communities but increased in 39 areas.
Miller sees some of the bolstering of the market as “a false positive,” created by the federal tax credit for home buyers, which expired April 30 but was extended to those who closed on a sale by Sept. 30.
Steve Harney, a former Long Island broker-owner who lectures widely on real estate trends, predicts that prices will continue to slide. Demand for housing will likely remain constant, but there will be a dramatic increase in supply from the continued flood of distressed properties being put on the market. “We won’t see prices [overall] go up until 2012,” he says.
So Harney’s basic strategy for sellers: Look at comparable home sales over the last 90 days – and deduct 10 percent.
Westbury
4 bedrooms, 2 1/2 baths
LISTED AT $435,000
SOLD FOR $415,000
(accepted offer within two weeks)
The sellers made minor repairs and cosmetic touch-ups, besides “decluttering” the house, says Susan MacDonald, an agent with Daniel Gale Sotheby’s International Realty in Garden City. Initially, the sellers wanted to list higher, say, $459,000. At that price, MacDonald and sales partner Patricia Cadavid told them: “We felt we were going to lose a large pool of potential buyers. If you price it right, you can create a lot of excitement.” The house pulled in “a lot of traffic” on the first couple of weekends, MacDonald says. When buyers see a lot of other buyers, she says, they tend to respond quicker to the prospect of losing a good house.
Centerport
3-bedrooms, 1 1/2 baths
LISTED AT $479,000
SOLD FOR $475,000
This home had small rooms and needed a new kitchen, but it also had the ingredients of a charming place people liked, says Bob Hyne of Prudential Douglas Elliman Real Estate, the listing agent along with his wife, Ruth Ann. An offer was accepted in one week. The key was in the advertising – “A Sea Captain’s Cottage,” Hyne says, alluding to local lore that the home was used by various seamen who came ashore during the community’s heyday as a bustling commercial port. “Phrases like that appeal emotionally to people,” he says.
Lindenhurst
4 bedrooms, 2 baths
LISTED AT $370,000
SOLD FOR $373,000
Before setting the price, agent Bob Meade of Century 21 AA Realty in Lindenhurst sat down with the sellers and first asked how they would feel about a price of $300,000. Would the house sell? Absolutely, everyone agreed, but “that would be a steal.” So they began bumping up the potential price – $320,000 . . . $350,000 . . . eventually up to $400,000, and asking the sellers what they thought. “You could see their body language start to change,” Meade says, uncomfortable that the price might be too high. “It was pretty clear we needed to be around $370. I had plenty of data to back that up.” Meade advertised the house for about 10 days before holding an open house. (There were no showings until the open house – that can help “create a frenzied effect,” he says). They went to contract within two weeks.
Woodbury
4-bedrooms, 2 1/2 baths
LISTED AT $799,000
SOLD FOR $785,000
This 45-year-old house was “in terrible shape but had great bones and was in a great neighborhood,” says listing agent Craig Bell of Realty Connect USA. He persuaded the sellers to hire a professional stager. The stager painted the entire house, ripped out old rugs, refinished wood floors, cleaned everywhere and brought in her own furniture – an investment of about $14,000. “Craig didn’t sugarcoat things,” says Scott Gilbert, who handled the sale of the home for his mother and stepfather. “He said, ‘If you really want to sell the house, you have to fix it up so it’s appealing to a buyer. . . . People need to walk in and picture themselves living in your house.’ ” (Three offers were made the first weekend of showings.) Gilbert had some trepidation about selling in today’s market, but says that by staging, “we got 10 percent more than we would have gotten.”
