If you are one of the many homeowners in Anaheim Hills and surrounding communities that had their home on the market when the economic downturn occurred, you may well remember the aggravation of keeping your home “show ready” while it sat on the market for months.
Many of you removed your homes from the market to wait for better times.
It is concerning that there are some homeowners who are reading about the frantic activity in the market place, and the apparent rise of the median price of homes in Orange County, and are once again taking up the practice of looking at comparable active homes for sale and offering their home for sale at a higher price.
These homeowners are thinking that, with all of the activity, home prices are being driven up as they were in the pre-downturn years.
I guess it is possible that the day will come when that scenario will prove true again, but today is not that day. Nor will we see that day any time in the near future.
The pitfalls of setting the price too high
Placing your home on the market at too high a price will again lead to months of aggravation for you, and could contribute to the a slowing of our Orange County housing market, as inventory increases, and potential home buyers perceive that there once again is plenty of inventory (even if it is priced too high to finance) and lose their sense of urgency.
And of course, a slowing of the market could cause your actual home value to slide further.
Why could this happen, you might wonder? It’s simple: The banks still have control of housing values.
They maintain control with tight lending standards and a “shadow inventory” of foreclosed homes to sell. They are selling these homes a little at a time. Not so many that it causes home values to fall, but enough to keep home values from increasing much, even with high demand.
I am not saying that the banks relish this control. For the most part, just the opposite is true. They would prefer to be rid of the foreclosed inventory, so that normal market forces can take over, raise the value of everyone’s property, and ultimately the value of their own portfolios, while helping to significantly reduce their risk.
Never-the-less, they must continue to sell off the foreclosed inventory, thus keeping a lid on significant appreciation.
Position your home for buyer financing
The median price reported by the media is the best (although often not very good) measuring stick for data reporting agencies to use, because it is not as volatile as the average sales price. However, the average sales price of similar homes in your immediate area is what you must use to underpin your price, because it is what the appraiser will use. Appraisers know that the median price can become artificially inflated by the mix of sold properties the median is being taken from.
Remember, as a part of a successful selling strategy (see the part for sellers in this post) in the new real estate market a seller must make sure to position their home for buyer financing.
At the end of the day, it will not do you any good if you have buyers lined up and down the street to buy your home for more than your neighbor’s asking price, if the price can not be supported by the appraisal necessary to finance the home.
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