Wednesday, April 25, 2007

New Home, Used Home

As I'm sure many of you saw, existing home sales were down in volume in March. Today the numbers on new home sales came out, and they were slightly up.
Before I go on, it is worth mentioning that these are nation wide numbers, and as I have been drilling into all of you who read my blog, Real Estate happens on a local level. Even when the pudits are talking about the California Real Estate Market, they are usually talking about Southern California. Real Estate is all about what is happening in your neighborhood, or the neighborhood in which you want to buy, not about the nation as a whole.
Still there are lessons to be taken from these numbers. The Sellers of New Homes are, by in large, developers. To them it is all business and little sentiment. If they numbers add, they will do it. They can;
  • Offer incentives to buy a home like upgraded kitchens or floors
  • Offer below market financing packages
  • Offer incentives such as paying for closing costs or title insurance
  • Lastly, though theyt will usually try the above strategies first, they will lower the price.
Since developers sell homes on a yearly, monthly, weekly, daily basis they are very tuned into the market and adjust to it with greater flexibility than say the seller of an existing home.
Existing home sellers, at most, sell a home once every 3-4 years. They are not as tuned into the ever changing market as developers. We saw it in 2005 when it seemed to take almost a full year of bad press, and a downward trending market to get sellers to catch on that they had to change something if they wanted to sell their properties.
Even in a flat market, or even in one that is shifting towards the buyers, a well priced home that shines like a diamond, will sell in days and attract more than one offer.
The entire marketing effort when selling an existing home is biult on the corner stone of a good price based on the inventory, the condition of the home, market conditions, and competition. Beyond that, great presentation like new paint, staging, new counter tops, etc. can make an existing home sell quickly and at a good price in any market.