Price it right
Ask too much in a down market and you may lose!
By
Vanessa Parks, Globe Correspondent | September
16, 2007
STOUGHTON - When Paul Rappoli Jr. put his four-bedroom
Colonial on the market for $449,900 in June 2006, he felt good about its chances of selling. After
all, it had an updated kitchen, a finished basement, and a winning backyard.
Eight months later, the house finally sold for nearly $75,000 less
than the initial asking price. "
It was a long, drawn-out, frustrating ordeal, and it was unfortunate," said
Rappoli. "I felt like we were constantly chasing the market, just constantly
chasing it."
Why didn't the house sell sooner? That's easy: the price.
"It was a beautiful house in a great neighborhood. There was absolutely nothing wrong with it. In the home inspection, nothing came up," said Jeffrey Ledin, a broker with Century 21 C&S Properties in Stoughton who stepped in after Rappoli's contract with his first broker expired. " The problem was the price."
When Ledin took over the listing, he repriced the house at $379,900. Just nine days later, it sold for $375,000.
" We
had eight showings in the first three days," Ledin said. "The
price sold it."
You hear it again and again from brokers, the notion that even
in this sluggish real estate market, a house will sell if it's
priced
right.
But what, exactly,
does that mean, to be priced right?
An exact definition is elusive. Though real estate brokers analyze recent sales to help determine a price, there isn't a handy formula that can punch out a good number at will. Rather, brokers said they rely on their experience to gauge whether a home is too high for a given market. And in a down market, it pays not to be too much above the typical price for the neighborhood and type of home.
" You need three ingredients to sell in this market," said James Gibbons of RE/MAX Landmark Realtors in Stoughton. "The house has to be in a good location. Second, it has to be in great condition, which wasn't necessarily a factor three or four years ago. And the most important factor is price. You have to be, in a nutshell, the best property out there in the price range you're in."
Take, for
example, three homes that recently sold in that town for $375,000: two
were listed at starting
prices far above
the average
for Stoughton
and spent longer than seven months on the market; they had
to come down in price
$43,000, and $75,000 before selling. The third was listed
close to the town average, and sold in less three weeks, for $4,000
below its original
asking
price.
Rappoli's 2,026 square foot four-bedroom house on Trowbridge
Circle was built in 1960. After listing it for $449,900 in
June 2006,
the price
dropped steadily,
first to $424,900 in August, and eventually to $399,900 in
December. He did get two offers: One buyer couldn't sell
his own house,
the other backed
out
days before the scheduled closing.Peggy Buresh of Condon & Walsh Real Estate
in Quincy initially had the Rappoli listing. She said they were building a
new house in Foxborough and were willing to take a bit of time selling. She
priced it at the high end, thinking, "Let's just try it and see
what happens. Then the market started to change."
Rappoli, who had grown up in the house, said, "Part of it had to do
with what I thought I'd like to get and what other homes in the neighborhood
had
gone for."
Now, he advises buyers, "Forget about what you want, about what
you could have gotten a year ago, what your neighbor got two
years ago - those
days are
gone."
Ledin, who eventually sold the house, said it probably was overpriced by about $50,000 when it first went on the market. That made it hard for price reductions to keep pace.
"
The market was dropping faster than they were dropping the price," he
said.
A few miles away on Britton Street, a 1,900-square foot home on nearly a half-acre
went on the market in July 2006 for $417,900. By November,
the price had dropped to $397,900 and still no takers. In February, the
owner hired a new
realtor,
Kathleen Doherty of Layton Real Estate.
She listed the house for $389,900 and two and a half weeks later, it sold for $375,000. Besides dropping the price, she suggested the owners clear out some belongings and replace the brown, faux-wood linoleum in the kitchen. "That took the age off the first impression. It was a quick fix and it really paid off."
" It was an older home, ranch style - that's a first-time buyer," she said. In her marketing materials, she emphasized the family room, the location at the end of the cul de sac, and two-car garage.
The third
house was a 2,276-square-foot four-bedroom cape on Johnson Road. Gibbons
listed it for $379,000
and it
sold 17
days later
for $375,000.
Was he surprised? "No, I can't say I was. It was a great house. It was
a big house, it had a beautiful yard, a Jacuzzi,
and big deck. It just had some nice bells and whistles," Gibbons said. "If
you price correctly and aggressively from the start, buyers are going to
recognize
it instantly
as a good deal. But if you don't get it right
at the outset, it's like chasing a runaway train."
Brokers arrive at a listing price by comparing the home as closely as possible to three or four other homes of the same style and condition, built around the same time, and with similar upgrades in the same neighborhood.
" You want to look at sold property because those are facts," said Susan Renfrew of Renfrew Real Estate in Greenfield and president-elect of the Massachusetts Association of Realtors. In this market, agents look at homes that sold no more than 90 days ago; they check to see how long the homes were on the market and whether incentives were offered to close the deal.
They also review prices on homes under agreement, but no longer use original asking prices as a guideline. There are just too many overpriced homes on the market.
Rappoli's
was one of them. "The biggest lesson I learned is you really have
to get someone who knows the market like the back of their hand and is
not afraid to tell what the real
value of your house is," he said.
He realizes that had his house been priced
properly at the outset, it probably would
have sold for
more than
it ultimately
did.
But he's philosophical
about it.
"It could have been a lot better, but believe me, it could have been a lot,
lot worse from a financial standpoint," Rappoli
said. "I look
at the big picture, going back to when we
bought the house, and we still made
money. I'm surprised it didn't go sooner,
but I'm glad the people who got it, got it."
http://www.boston.com/realestate/news/articles/2007/09/16/price_it_right/
© Copyright 2007
Globe Newspaper Company.
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