The biggest news in residential real estate is the ensuing debate over the true value of a home. Pricing a home correctly is crucial in a property's ability to sell and has been a difficult task in 2006. In years past, pricing a home was as easy as asking, "What did the neighbor's home sell for?" In this market, homes priced at or below a neighbor's sale is not a guaranteed method to price your home. Through the last five months, homes priced below market continue to languish for sale, as others homes sell. Why?
According to the market in 2004, the value of the property was worth 3 to 5 percent more than comparable homes recently closed. Buyers did not question the value and accepted the idea that they should pay based on past sales. The scarcity of homes and the record low interest rates created an environment that supported the idea. Last year, the buying environment changed. More homes were for sale and fewer buyers were competing, so homes stayed on the market longer. Buyers were finally able to stop and decide, "What do I really want? Buyers have easy access to information about every currently available home for sale. As long as buyers perceive that it is not urgent for them to buy now rather than later, they will take their time to comparison shop your home. The buyers will debate its value in comparison to other homes on the market during their search.
To correctly price your home, you must know which type of buyer will purchase it and what other areas in Carlsbad might appeal to them. Then, research every comparable home for sale and have an un-emotional idea of the way in which your home compares with the other choices. Because recent sale data is easily accessible to consumers, factor in a competitive price for your neighborhood.
As demand within the Carlsbad market fluctuated with interest rates, that number changed. Some sellers have had a difficult time reacting to the market. In order to flex with a changing market, a majority of the homes sold in 2006 utilized a variable price; setting a low and a high value. Sellers use range-pricing to encourage more offers, even if they are low. People generally want what others want, and fear-of-loss to a competing buyer may help the seller get more for their home.
Noticeable Trends
Interest rates
As 2006 began, interest rates were a low 6.1 percent. With each passing month the interest rates moved higher, until they hit near 6.8 percent in July. The increase in interest rates coupled with the seasonal summer increase in inventory created an uneasy feeling with buyers. With the prevailing thought that mortgage rates would hit 7 percent by the year's end, buyers backed off and waited. The local market saw a sharp change in buyer mentality during the last four months of the year. Homes that were sold during the latter part of 2006 reacted to the changing demand and lowered their price. Since the summer, interest rates have come down and buyers have come back. Watch them close and factor the current rates into your pricing decision.
Fixers
Properties that need fixing up have been passed by a majority of buyers and stand at tremendous value. Most buyers gravitate towards homes that are in good condition and ready for move-in, and properties that need work are not selling, even at a discounted price. If you have vision to see a home’s potential, there are a handful of properties in Carlsbad that are currently selling that at amazing prices. For example, a 4-bedroom, 2,100-square foot property in Calavera Hills is located in an established neighborhood that sells for the $700's. The property has the potential to be worth more than $700,000, but it needed work. As I write this article, this home reduced its asking price from the neighborhood average of $700,000 to $599,000, because of the work that was needed inside. It had an accepted offer on Jan. 12 shortly after the price reduction.
According to the market in 2004, the value of the property was worth 3 to 5 percent more than comparable homes recently closed. Buyers did not question the value and accepted the idea that they should pay based on past sales. The scarcity of homes and the record low interest rates created an environment that supported the idea. Last year, the buying environment changed. More homes were for sale and fewer buyers were competing, so homes stayed on the market longer. Buyers were finally able to stop and decide, "What do I really want? Buyers have easy access to information about every currently available home for sale. As long as buyers perceive that it is not urgent for them to buy now rather than later, they will take their time to comparison shop your home. The buyers will debate its value in comparison to other homes on the market during their search.
To correctly price your home, you must know which type of buyer will purchase it and what other areas in Carlsbad might appeal to them. Then, research every comparable home for sale and have an un-emotional idea of the way in which your home compares with the other choices. Because recent sale data is easily accessible to consumers, factor in a competitive price for your neighborhood.
As demand within the Carlsbad market fluctuated with interest rates, that number changed. Some sellers have had a difficult time reacting to the market. In order to flex with a changing market, a majority of the homes sold in 2006 utilized a variable price; setting a low and a high value. Sellers use range-pricing to encourage more offers, even if they are low. People generally want what others want, and fear-of-loss to a competing buyer may help the seller get more for their home.
Noticeable Trends
Interest rates
As 2006 began, interest rates were a low 6.1 percent. With each passing month the interest rates moved higher, until they hit near 6.8 percent in July. The increase in interest rates coupled with the seasonal summer increase in inventory created an uneasy feeling with buyers. With the prevailing thought that mortgage rates would hit 7 percent by the year's end, buyers backed off and waited. The local market saw a sharp change in buyer mentality during the last four months of the year. Homes that were sold during the latter part of 2006 reacted to the changing demand and lowered their price. Since the summer, interest rates have come down and buyers have come back. Watch them close and factor the current rates into your pricing decision.
Fixers
Properties that need fixing up have been passed by a majority of buyers and stand at tremendous value. Most buyers gravitate towards homes that are in good condition and ready for move-in, and properties that need work are not selling, even at a discounted price. If you have vision to see a home’s potential, there are a handful of properties in Carlsbad that are currently selling that at amazing prices. For example, a 4-bedroom, 2,100-square foot property in Calavera Hills is located in an established neighborhood that sells for the $700's. The property has the potential to be worth more than $700,000, but it needed work. As I write this article, this home reduced its asking price from the neighborhood average of $700,000 to $599,000, because of the work that was needed inside. It had an accepted offer on Jan. 12 shortly after the price reduction.