Real Estate Article: The Two Greatest Difficulties a Seller Must Overcome in Today's Market.
11/19/2007

The current market has slowed down substantially compared to its peak in mid 2006. This is especially apparent in San Bernardino County where sales volume has dropped over 40% and prices have dropped 15% compared to last year. As for Chino Hills, the sales rate has already fallen to 5.6%, meaning, that only 1 out of every 19 listed properties are being sold. For many sellers, this reality is very hard to stomach and many of them are still being stubborn about selling at a high price. Given the current market statistics, I believe it is vital for sellers to not only set their asking price at one that is reasonable but one that will have an obvious competitive edge over other sellers. The reason for doing so is because there are two new factors that must be accounted for in today’s real estate market.

The first is the level of competition sellers are facing. Although the current sales rate in Chino Valley is only 5.6%, a portion of those sales are composed of bank owned properties and pre-foreclosure sales. The real sales rate is actually lower than 5.6% which is already an extremely low percentage. As a seller, it is very important to keep in mind that you are competing not only with other sellers but also bank owned and short sale properties as well. These circumstances make it increasingly difficult for the seller because you are competing with properties that must be sold at all costs. Regardless of how low they must drop a price, short sales and bank owned properties must be sold due to the nature of the transaction. Although you have the option at setting your asking price as you please, you are competing with people who are willing to do whatever it takes to make the sale. It is very important to consider those factors when setting your asking price and actually being able to compete with your competitors.

The second factor is the change in the mentality of buyers. Last year, after open escrow, the success rate of a transaction was very high. Chances of success this year have decreased dramatically. The agreed upon price can become undesirable very quickly in a slowing market like the current one. When buyers find a new property cheaper than the one they have agreed to purchase from you, they will not think twice before backing out or demanding a lower price. Normally the contingency is removed after a period of 17 days. This means that buyers have up to 17 days to back out of a contract without penalty. It is important that your price is still viewed as a good deal in the eyes of the buyer for at least 17 days if not more. Some buyers are even willing to forfeit their deposit for sake of purchasing a cheaper property.

Bottom line is your price must remain strong to the buyer for as long as possible to maximize chances of a successful sale. Strong compared to all competitors such as bank owned properties and short sales, not just other buyers. If you are unable to reasonable accommodate the standards of selling in the current market, you must be prepared to face disappointment. If you cannot adapt to the current market, consider selling at a different time when the market is better.

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