Overvalued Markets And How To Sell In One

(The housing market is something that is generally slowing across the nation, but what many people do not realize is that every city, state and town sees different trends and patterns. Some areas are not even really experiencing a slowdown at all, although the majority of markets are. )

One thing that we must take into consideration is areas that experienced tremendous growth and price appreciation from about 2000-2005. Many of these places are now considered highly overvalued, which is not good for anyone.

These overvalued markets are the ones that are fairing the worst during this slowdown because they still have the sky-high prices that many people cannot afford.

A November 28, 2006 article by Matthew Heimer of The Wall Street Journal, “What to do in a market that is headed for a falloff,” discusses some tips on selling as well as current facts on the housing market in general.

“After hurtling along for years, the nationwide real-estate boom has come to a screeching halt. In 2005, home prices in the U.S. rose more than 12%; this year, the National Association of Realtors expects appreciation to reach just 1.9% -- the lowest gain since 1992.”

“Rising mortgage rates and sell-offs by skittish real-estate investors have helped depress housing prices in many metropolitan areas. But there's another factor that many observers miss: the relationship between home prices and incomes.”

In these overvalued markets, people’s salaries have not caught up with the high price of housing, which causes the amount of potential buyers who are able to afford a house to decrease dramatically.

This in turn causes prices to shrink as well since sellers are forced to lower their asking price to attract the small amount of buyers out there.

“According to Ingo Winzer, president of the consulting firm Local Market Monitor, any market that's more than 30% overvalued is due for a correction. In the fall of 2003, only eight markets on the list of 152 fit that description; on this year's list, 37 did. Sure enough, price decreases are beginning to pop up in many of the markets that have shown up year after year as the most overvalued -- especially in Florida and California.”

The average home price in San Diego now stands at $502,000, which is overvalued at 60 percent. This is a tremendous amount.

“What to do if you're in a falling market? Obviously, that's a promising climate for a bargain-hunting buyer. A savvy real-estate agent can help you craft a bid that's low enough to save you money, but realistic enough to be accepted.”

“When one of Frank Borges LLosa's clients finds an appealing home, the Northern Virginia broker searches the history of the selling agent -- data not available to consumers -- on the local multiple listing service. If the agent frequently sells below the asking price, Mr. LLosa knows he can be aggressive.”

If you are not completely obligated to sell your home right now, most experts would recommend holding off until things start to get back to normal.

But if you must sell in today’s market, your best weapon is to hire a phenomenal agent and not be unrealistic in your pricing. “South Florida broker Mike Morgan recommends that his clients take 1% to 3% off the price every week until they get an offer.”

“Another way to motivate a potential buyer: Motivate his broker. In a typical sale, a commission of 6% is split evenly between the buyer's and seller's agents. But you can ask that a higher percentage go to the buyer's agent, or even offer extra money out of your own pocket, so that she'll steer customers your way.”

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