How to Price a Home to Buy or Sell in a Down Market

Are you curious as to how to price a home for sale or purchase in this present down-turned market? A smart investor will look at long-term real estate trends and make an offer taking into account the relative stability of the area. With this strategy, there is no wrong time to invest in real estate, if the price is right. Likewise, sellers should also anticipate that a down-trend is unpredictable and if they truly desire to sell it makes sense to price with discounts earlier rather than later. Here are five factors in home pricing in a down market.

1. REASON FOR SALE. What is the reason for the sale? If there is a death in the family and a house must be sold, or if there is a long-distance relocation, the incentives to sell quickly are much greater. It can cost a lot to manage a property long distance and the maintenance costs, taxes, and overhead in general are a definite factor.

2. USE OF PROPERTY. If a home is in a tourist area such as the Hamptons, NY area, it’s possible for interesting and appealing homes to continue to rent for income in the summer even in a down market for the right price. Likewise, a home suited for a family can be rented out year-round and this can be a factor in desirability. The option of renting even in a down market is a factor in buying and selling.

3. HISTORIC PRICE INDICATORS. Long-term historic real estate charts and trends help to anticipate price trends. Locations such as Southampton, NY tend to be extremely stable and dipped only slightly during housing bubbles compared to other areas in the US.

4. CURRENT TRENDS. Look at the relative foreclosure rate in the area. Recent foreclosures and REO bank-owned property sales are one indicator of sale price pressure and price trends. For locations next to cities, look at the city. For example, house prices in the Hamptons, NY area tend to follow prices in NYC because of the heavy influence of business income from the city entering and leaving.

5. GUAGE THE BEST PRICE. Taking all of the above into consideration, add one more price consideration, the law of diminishing returns. For a home seller, there is a point at which the risk of losing profits from pricing too low is offset by the risk of not selling and following the market down to a much lower sales amount and paying continued overhead costs. I learned this lesson the hard way with a personal property. If your conditions are such that you have to sell, rule #1 for the stock market and real estate is to cut your losses short.

In terms of trends in the greater NYC area, home prices continue to trend lower. After being on the market for over a year one home in Manhattan sold for nearly half of its asking price. NY Curbed describes the details. Likewise, a Hamptons NY mansion recently had its asking price cut in half and it still has not sold. Mansions Global highlights this Amagansett, NY 6,500 property.

In addition to market concerns and price strategies for a down market, there are many practical steps that can be taken to make a home more cosmetically more appealing and these are listed at Investopedia.

If you are interested in having a dedicated agent assist you in buying, selling, or renting in NYC or on Long Island, let me know. I offer a 15% discount to active military, veterans, seniors and other listed on my home page. Looking forward to hearing from you.

Article By Richard Warden


References:

Hamptons Mansion Sees 50% Price Cut The approximately 6,500-square-foot home now asks almost $6 million
https://www.mansionglobal.com/articles/hamptons-mansion-sees-50-price-cut-111308

Upper East Side mansion once asking $50M sells for nearly half off
https://ny.curbed.com/2018/4/12/17228610/upper-east-side-charles-murphy-home-sold

Still The No. 1 Rule For Stock Market Investors: Always Cut Your Losses Short
https://www.investors.com/how-to-invest/investors-corner/still-the-no-1-rule-for-stock-investors-always-cut-your-losses-short/

6 Tips On Selling Your Home In A Down Market
https://www.investopedia.com/slide-show/selling-homes-down-market/