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VCJIM.
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July 23, 2006 at 3:31 PM #6971July 23, 2006 at 5:15 PM #29375
powayseller
ParticipantYeah, I got screwed on that value pricing thing. The realtor said I should get $830K for my house, but we need to bring in the buyers doing the MLS search up to $799K, so we have to put in a value of 780-830. The buyer who found my house on the MLS doing a search up to 799 or 800K, will fall in love with my house and come up with the extra 30K. That was the plan.
This is how it really worked: the buyers saw I would accept 780-830, so why offer 830? Both offers were for 780.
These bottom-range offers came in December. Hasn’t this gotten out to all realtors yet? Isn’t the NAR and CAR supposed to educate y’all on this? You pay them dues, right?
Value range pricing basically is an invitation to get an offer on the bottom end. Why bother with the upper number? You’ll NEVER get it, and it just confuses people.
Great post, SD Realtor.
July 23, 2006 at 6:33 PM #29382OwnerOfCalifornia
ParticipantAgreed. If I was buying, I would use the low number as the real asking price, and then bid lower than that.
Price ranges seem to be a SoCal phenomenom. I moved from Texas a couple years ago, and there are no price ranges on any properties in Texas (that I know of).
July 23, 2006 at 7:15 PM #29384Anonymous
GuestFirst post here, so please be kind…..
Here in FL, I have always learned from observing the SoCal market, using it as an indicator of sorts. I am interpreting the recent stats as saying that you in CA are very fortunate.
I was recently given an audience with my local SW FL MLS committee on the subject of – you guessed it – value range pricing. I am in favor of adopting it here, but since the concept is met with skepticism, I was dismissed with instructions to collect more information. Perhaps you good folks will offersome numbers or experiences.Here’s my point: Our market is soooooo soft, that almost every seller in our area would be thrilled to get any offer on their listing. Getting two offers at 6% below list would make any local agent a hero – big time.
This brings up another related point – is our market now an indicator of what will happen in SoCal? Are you numbers as extreme as ours? I run a site that basically aggregates MLS data from to adjoining MLS’s covering about one and one half small counties. To spre you some of the math, my database now contains some 32,000 listings. We have approximately 3,000 agents in the same area, and sales are happening at a rate approximately equal to two per year per agent. Scary for both sellers and agents alike, agree?
I have heard several accounts from your area of cases where sellers received 100% offers after initial low-end offers were rejected or countered. So, while a 94% offermay still be less than desirable there, will SoCal sellers be thrilled to get such an offer in another 6 to 12 months – if that market turns to match our conditions here in SWFL?
We all know that many less saavy agents present prospective sellers with high suggested prices in order to get the listing. In any area, these are often the most well-publicised agents that seem to always carry many listings. They don’t do anyone a service by trying to perpetuate last years levels. (Perhaps that’s what happened to the poster who felt duped). Here we walk out of listing appointments when the prospect has an unreasonable price expectation.
Perhaps value range pricing (which, btw, I believe started in IL in the 70’s) will let the market prove to the disillusioned seller what their property is really worth today. Perhaps that’s what it’s doing for you all in SoCal right now. Is that the reason your market, although changed, is still stronger than ours?
July 23, 2006 at 10:00 PM #29397sdappraiser
ParticipantI’m an appraiser and broker. I get a few listings a year from clients who call for ‘pre-listing’ appraisals that I’m able to convert into actual listings.
Even in this soft market, I think there are some advantages to value ranges. Most agents I speak to are shooting for a mid value when using a range. When I use a range, I’m shooting for the low end. I’ll price the range with the bottem end being what my client indicates is their bottom line. If we get an offer somewhere in the middle, that’s a bonus. If we get an offer on the low end, which is what we want, the buyer feels like they got a deal because they ‘low balled’.
As an appraiser, I see comps all the time that were obviously mis-priced using a single value point. Sellers sometimes leave money on the table, even in a soft market. Many real estate agents simply don’t understand how to run an accurate CMA.
July 23, 2006 at 10:15 PM #29400SD Realtor
ParticipantSD Appraiser you hit it on the head…
“Many real estate agents simply don’t understand how to run an accurate CMA.”
Oh so true…I cannot argue with you about that. However what you said really rings true,
“When I use a range I’m for the low end.” However most sellers are for the middle at the very least. I guess in your case if you prep your client well and tell them, “Look, if I am gonna list this range, then you cannot poo poo low end offers” then I guess that is fair.
I think again, that if you do your CMA correctly then that is great and your single price point is valid. Also even if you do your CMA correctly in a rapidly depreciating market, it may not matter… you end up chasing the market anyways.
Again, it is simply personal choice, I always recommend a single point…
July 23, 2006 at 10:51 PM #29406ParticipantWhen I run my CMAs, I put the MOST weight on active and pending listings. I try to price the listings based on how the competition is priced and how long they have been on market. In the end its all about the principle of substitution.
Even with years of experience as an appraiser, I’m not good enough to come up with a single point of value as a sales price (mortgage work is a different topic). Buyers are emotional and don’t always make logical decisions. As a broker, I believe single point values leave too much room for leaving money on the table.
Like you said, its all about educating and manageing the seller’s expectations. I won’t accept listings that are unreasonably priced and I won’t promise the moon if I can’t deliver. I think an appraisal class should be mandatory for all R/E agents.
July 24, 2006 at 9:24 AM #29430(former)FormerSanDiegan
ParticipantValue Range Works in Sellers’ Market
From my personal experience as a homeowner. We listed our home in April 2005. At that time things were still pretty hot in our area with little available inventory. Doing a CMA in that environment was difficult if not impossible. There were basically no homes listed at the time between 600K and 900K, so we (and buyers) had no idea how to narrow it down to a number. Decided to list at 789 to 849K (my choice, not the agent). Lowest offer came in at > 800K. Sold for > 820.
In todays environment EVERY price point is covered with today’s listings. There are no gaps in inventory. So it does not make sense to do this kind of pricing in today’s environment in San Diego. Just want to point out that there are times where this strategy makes sense and is justified.
July 24, 2006 at 10:12 AM #29441ParticipantHi FL Realtor. How did you find us? Welcome, and of course we are kind. We are very nice over here, unless someone tries to pull the wool over our eyes.
Why are we an indicator? I think of FL as an indicator. Why do analysts call San Diego the canary in the coal mine? I would choose FL for that designation. You are a few months ahead of us. You’ve got realtors who refuse listings, listings and open houses with nobody coming through for weeks, a realtor who wrote he had 36 listings and not a single showing in weeks. Why are you ahead of us? Did you start your price runups 6 months or a year before we did? Did you have more speculators? I believe we will follow you.
You’re not getting offers for your sellers because we have a glut of sellers. There is a seller/buyer imbalance. In SD, we have 8 sellers for every buyer. What is it for you? Think about it, if I am a seller in San Diego, the buyer that I want is looking at 7 other houses. Why would he pick mine? Hopefully I am not on a busy street or have some odd layout or other problem, because that would doom me. The price must be good. Why don’t your sellers undercut the competition? It always comes down to price. Every house will sell if the price is right. At some point, the price is so low, that investors will come back.
Our inventory is over 22,000, and exceeds the highest level of inventory of our last bubble. You can get local data by checking these sites by realtors Bob Casagrand and Jim Klinge, local realtors.
How many agents have left the profession?
Are you sure sellers here are getting 100% offers? Please tell us the details, because I find that hard to believe.
July 24, 2006 at 12:45 PM #29467VCJIM
ParticipantHere’s an article on value pricing:
http://www.freep.com/apps/pbcs.dll/article?AID=/20060723/BUSINESS04/607230521/1017
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