Losers in a Softening Market
Hi everybody, this is Doug Buenz with the 680 group at Venture Sotheby’s Realty and 680homes.com. Welcome to the latest episode of Inside Real Estate. Today our topic is Losers in a Softening Market. Everybody knows the market has softened, so the question is, who is not benefiting from these market conditions?
So, the first group that is having a hard time in a softening market would be unmotivated sellers. If you are not really that motivated to sell you might find it to be a tough market for you. So, really as a seller, the question you need to answer, are you motivated enough to win in this market? And if the answer is no, perhaps you should wait for a different market.
The second group of losers in a softening market are homes with location issues. So, if your home is on a busy street, or backs up to a freeway, or has some locational issue that makes it less compelling in the marketplace, you are going to find that you are going to have a tougher time in this market. Why? Because buyers have many more choices in the marketplace. They don’t have to choose homes with locational issues. Remember, even in a hot market, buyers tolerate location issues; they don’t seek them out. When they have more choices, they naturally gravitate towards homes in better locations.
The third group of losers in a softening market would be homes that need substantial upgrades. Buyers, again, have several choices out there in the marketplace and they are less inclined to choose homes that need a lot of work, especially if they can find other homes that are more up to date at a similar price. So again, buyers determine what is compelling to them and if your home needs a lot of work, it really needs to be discounted to attract buyers’ attention in a softening market.
The fourth group that experiences challenges in a softening market would be properties that have high HOA dues. In a sellers market, when there are multiple offers, buyers tolerate higher HOA dues. However, when the market softens, buyers take a much closer look at things like HOA dues and expenses, and we find generally, that homes that have higher HOA dues, condos, or townhouses that have higher HOA dues typically have a harder time in this marketplace. Remember, buyers tolerate high HOA dues, they do not seek them out. So, if you have high HOA dues, you need to adjust your price accordingly to attract attention.
The last group that struggles in a softening market, are sellers who have been on the market for a while but are not willing adjust their price. If you are going to stick firm to your price and it is not selling, you might be better off taking your home off the market and waiting for market conditions to change because, once you are on the market for 30, 40, 60 days or more, buyers almost completely disregard your property or maybe worse yet, come in and extreme low ball offers. So, if you are a seller and you are really just not willing to lower your price, perhaps you should rethink selling your property in the current market conditions.
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