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April 12th, 2010 2:34 PM by David W. Welch
With all the changes in the real estate market in Orlando, the basics are still the basics. One of those real estate marketing fundamentals is price. Pricing is always a tough subject, because you do not want to overprice the home and risk not selling at all. You also do not want to underprice the home and risk leaving precious equity on the table. The issue of pricing a property correctly is even more important now, with such a large distressed property market. How do you price your property correctly when you are competing with bank owned and short sale properties? It really is not much different from pricing to compete with your neighbor; the prices are just a lot lower than they were a few years ago. You need to understand the pricing strategy of your competition.
Prices have fallen in Orlando by nearly 60% from their peak in October 2006, fueled by REO's. Once a bank has foreclosed, they have taken their loss and are primarily interested in recouping what they can as quickly as they can. The banks do not have a lot of patience with the market, and will reduce the price on their properties until they get an offer. They don't waste time with small price changes either, they drop 5% or 10% at a time to get interest. Sometimes they price a property well below the market to start a bidding war in the hopes of pushing the price up to the market. Short sales have no equity to leave on the table, and price very aggressively to solicit any offer that they can take to the bank for approval. This forces the bank to set the price they will approve, if they agree to the short sale at all.
With your competition in mind, you need to price your home to be competitive with the bank owned and the short sales in your area. Banks are difficult to deal with and slow to make decisions. As an individual owner, you can provide a quick answer and more friendly terms. This should give you a slight benefit in pricing, but not 10% or 20% higher than the bank owned and short sales. Look at the actual closed sales within the last 90 days, as well as the active and pending inventory. You may need to look outside your neighborhood too. Keep your comparable properties within a mile if you can, and don't put too high a value on your neighborhood. Unless there is something tangible like being gated, or having community amenties like a pool, fitness center or tennis courts, your neighborhood is probably not going to be valued that much higher than the one next door by potential buyers.
Priced competitively, your home can sell in a reasonable period of time. Another agent in my office recently received a full price offer just days after placing a home on the market. His listing is a little smaller than some other properties in the neighborhood, but it is not a distressed property. He priced this house within 1% to 2% of the short sales and bank owned properties, and got a great offer almost immediately. Price it right, and they will come (with contracts).
David Welch Real Estate Optimist, Orlando Real Estate