I Get It! I Get It!
If you’re having trouble selling your home, lower the price. Seems pretty simple right? So why did it take so many Americans so long to figure it out? Greed? Unwillingness to admit defeat? An inexplicable, inexhaustible, inability to stop keeping up with the Jones’s??
Well, they finally get it. The National Association of Realtors reports the largest national drop in median existing home prices ever in the month of October; prices down 3.5% across the board and even lower in certain regions of the country. And guess what? Sales bumped up for the first time since last February. What a shocker! Lower the price, and someone will buy your house.
So after the numbers came out, I went to a broker’s open house in Wesley Heights, which is a really swanky section of DC. The neighborhood is stuffed with big brick Tudors and sprawling center hall Colonials. Nothing on the particular street I visited goes for under two million, at least it didn’t until now. This one was priced just under two, and they were about to lower it another $100,000.
A broker’s open house is a funny little scenario; the listing agent opens up the house to her competition and asks their opinion as to the pricing. One by one the agents came in, twisted their noses at the underdone kitchen and shook their heads as they peered out the window at the shared driveway.
The listing agent, Nancy, who sells just about everything in Georgetown and its expensive environs, and who has made millions and millions on the back of the boom, was positively cheerleading the price reduction. Only she didn’t call it a “price drop.” She referred to it as a “Repositioning.” That is, “Repositioning” the price of the home to adjust to the slowing market. That implies there’s nothing wrong with the house, there’s just everything wrong with the market. “It’s all psychology,” says Nancy. Isn’t it always?
But next week she’s taking it one step further. She’s going to advertise the house as, “Drama Pricing”.
“We want to put it on for a drama price, and a drama price is something that catches attention today, and that is really pricing under all the competition so that a buyer, it catches their eye, and they realize that there may be some value here,” says Nancy.
Value. It’s all about getting a good deal, not that it wasn’t before, but a year ago getting a good deal meant beating out your competition in a living room bidding war. Now it has to be a stunner, it has to be not only under the competition, but under the expected value of the neighborhood and “dramatic” enough to make a buyer think they’ve beaten the market.
The experts will tell you that prices always lag behind sales, that even as sellers watch the houses sit on the market for ever more days, it will take them ever more months to give in on the price. This particular real estate boom was unique because it was so sharp and so fast. Double-digit price-appreciation in many urban markets made many people think they couldn’t lose. After all, houses aren’t like stocks; even if a house starts losing value, you can still live in it, and that’s worth something. But some people still need to move, and therein lies the predicament and ultimately the face-off with reality. Times have changed, and finally no one, not even the ever-stubborn seller, is afraid to admit it.
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