Darcy has been doing a lot of Brokers Price Opinions in the past several weeks. She was recently asked to do a BPO for a short sale that has a pending offer on it. I was surprised when she pulled all of her sold comparables as well as her listing comparables to find that that house has a market value significantly higher that the listing price. This hasn’t happened for awhile.
The house was priced right when it was listed several months ago, but with the succeeding price drops, it is now under the market value. In fact, it is under market value by several thousand dollars. We had shown it not long after it had been listed and thought it was a good value at the original listing price.
This has got me questioning whether this is a good sign in the Cedar City Housing Market or if buyers are devaluaing properties because they are short sales. I know many buyers look at short sales as an opportunity to get a home at a good value. The problem becomes, in my mind, if buyers continue to low ball listing prices that are already a great value in the market and the banks accept them, the market continues to trend downward as far as pricing is concerned.
As Realtors I honestly believe we have two obligations here. As the listing agent, you need to really do your homework and price short sales (or any listing) at or maybe slightly below market value. Then you need to keep on top of the market, making sure that the house stays competitive. I really believe that you need to make sure that the buyers and buyer agents understand that they are getting a good value in your marketing.
As a buyer’s agent, you need to educate and train your buyers on the market value of a listing. The odds are that you are already landing a bargain for your client, but I believe that you need to do your homework too. You need to be able to show why you’re making a lower than list price offer with comparables to justify your offer.
One of the tools that we use is a pricing grid. I would suggest using something similar with a buyer, sit them down with a grid or spreadsheet and list every home in the area that has closed in the past 1-3 months. Eliminate those that are not comparable by virtue of size, location, age, condition etc., until you have every house you would us if you were doing a CMA, BPO, or listing presentation. Then show the buyer what the house should sell for. I warn you, if your market is like ours, those prices will be all over the place!
The short sale process is improving, it has a long ways to go, but it seems like the year long closings are the exception and no longer the rule. We have many that are taking not much longer than a traditional closing. The onus is on us as Real Estate Agents to educate, train and consult. I do know one thing, a continual declining market is not a good thing. Even investors lose when their assets continue to decline in value.
Cedar City area house
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