Hold your Horses Orange County Sellers

Sellers are becoming overzealous and overconfident way too early in the Orange County real estate market.

 Overzealous SellersOverconfident sellers are starting to ease their way into the market, wasting everybody’s time.  Here are the words of my marketing partner, Steven Thomas that refelct what we are seeing in the market each and every day.:
It would be great if buyers and sellers could pull their emotion out of the equation when they approach the real estate market.  Unfortunately, that is not human nature.  Not too long ago there were too many homes and demand was low.  Many buyers wrote offers to purchase homes that were ridiculously lower than the asking prices, even after market values had already dropped more than 30%.  That was a waste of everybody’s time, energy and the paper that the offers were written on.  Buyers wanted a “deal” on top of the “deal,” even though the dropping market had already provided just that. 

Flash forward to today, just a few months into a healing housing market, and sellers are already getting ahead of themselves and offering ridiculous asking prices.  This is a brand new phenomenon that I warned would occur sometime this year.  Fortunately, right now it is the exception and not the rule.  Many more home sellers realize that buyers are not ready to pull the trigger on massive appreciation and are not going to ignore comparable sales.  They are willing to pay a little bit more than the last buyer within hot ranges and hot areas, but let’s curb our enthusiasm.  A few thousand dollars more than the last comparable sale is agreeable to a buyer in the midst of a lot of competition, but they will walk away, or will ignore altogether, a home that is listed at 5% or 10% above the last comparable sale.  The market could get to that price over time, but it will not jump there in the blink of an eye like everybody witnessed during the heydays of the early to mid-2000’s. 

As this chart illustrates, unless a seller was a bank, there not only was a bit of wiggle room in the price, on average, successful sellers had to reduce their asking prices in order to achieve their goal of closing.  For all of Orange County, the sales price to original list price ratio was 96%; yet, the sales price to last list price ratio was 98%.  Here’s another eye opener for sellers: the higher the asking price, the larger the discounted sales price and the larger the price reduction.  Remember, these are successful sellers.  Even with the much hotter, healing market, there are countless sellers that do not achieve their goals of selling.  For a variety of reasons they do not achieve success: condition, location, deferred maintenance, motivation, price.  The number one reason is quite simply price.  Last month there were 1,063 homes that were pulled off the market.  That is a lot of homes, representing over 19% of the current active listing inventory.  Many of these sellers place their homes on the market and ignore the data.  They throw out logic and reason because they are emotionally attached to their home.  They are heard saying, “This is what I have to get from my home,” and then they throw out some dollar figure.  Buyers could care less how much a seller wants to get out of the sale of their home; instead, they are much more interested in paying the fair market value. 

There are also many sellers who state, “I really do not have to sell.”  With that approach, my suggestion is don’t.  Why waste everybody’s time including your own?  Your house will be shown a lot.  It just will not sell.  Do you want to prepare daily for buyer after buyer to traipse their way through your home?  Just enjoy the rest of your summer and put your market on the home when you need to sell it.  Priced in reality and with my outside-the-box marketing plan, it will sell with minimal inconvenience and you will be on your way to realizing your goals.

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