CUT & RUN SELLERS LOWER PRICES TO MOVE HOMES.
For five long years, sellers enjoyed the upper hand in real estate negotiations as prices soared and home supply got as tight as a cramped, downtown studio loft.
Now, with plenty of supply and falling prices, sellers are lowering asking prices and scurrying to doll up their homes to lure buyers who are comfortably back in the saddle and using their newfound leverage to take revenge.
As part of an offer on a three-bedroom house in Long Beach, Yowanda and Lay Salter asked that the seller throw in $10,000 to cover closing costs on the $545,000 property. At first, the seller balked.
But a month later, realizing he had no better offers, he came back with his tail between his legs and ended up paying almost the entire closing cost.
`Dozens of offers' era over
Realtors across the region say the days of home sellers getting 40 great offers and cherry-picking the best are history.
``A motivated seller is more apt to say, `I'm not getting 40 people trampling my door down.' So people are reducing prices,'' said Maggie Mouscardy, an agent at Jay Kaplan & Associates who handled the Salter sale. ``In the last four years, we had a smorgasbord buffet. It was Christmas every day. Now we're back to daily life.''
Sales of single-family homes in California dropped 31.7 percent in September compared with the same period last year. Median prices statewide fell 4 percent, from $576,360 in August to $553,050 in September.
Meantime, the number of homes on the market has swelled in recent months, pressuring prices and sales.
As of September, it was taking seven months to deplete the supply of homes on the market at the current sales rate, according to the California Association of Realtors. During the same time last year, it took just 3.2 months to clear the inventory of unsold homes.
Botox for lucky buyer
The cool-off is prompting brokers and sellers to come up with creative marketing incentives to move their houses. For condo sales, owners or Realtors are offering to pay the homeowners' association fees for six months to a year. They are offering bonuses and higher commissions to buyers' agents to get a house sold. South Bay broker Carol Gilles said she heard from another agent about a seller offering to pay for Botox treatments for the lucky buyer.
``In my marketing, I advertise on TV, the Internet, through open houses, because we just need one buyer,'' said Nancy Bhatia, a real estate agent at Click and List.com in Woodland Hills.
She said she doesn't offer ``crazy things'' like Botox or a car in the garage, but instead puts cash on the table in the form of paying buyers back 20 percent of her commission, or helping arrange creative financing for buyers who have a hard time qualifying for a loan.
Allison Van Wig, an agent covering Lakewood and Long Beach, is taking a cue from car dealers.
``On one, I offered no house payments until 2007. So if you bought the house in September, the first payment wouldn't be due until next year.''
Michelle Esparza, an agent at Century 21 OIE Group in San Dimas, said agents are offering a $5,000 bonus to the opposing agent, and commissions agents receive on the sale of a house have jumped in the last year. ``Now, you have to offer 4 percent,'' she said. ``A year ago, it was 2.5 (percent). Sellers have to entice agents to show their property now.''
Sellers slash prices
Perhaps the most dramatic change in real estate sales has been sellers cutting prices. In most areas, overall discounts are within 10 percent of the asking price. But every little decrease seems like millions for buyers who just last year saw their home prices appreciating at a rapid pace.
That has made many sellers slow to wake up to the new reality of what buyers are willing to pay.
``The market has shifted from sellers to buyers, but people don't realize it. If they are desperate, they can put it $10,000 below market and it will fly, but we are having a hard time convincing people of that,'' said Lily Yoohanna, of Century 21 Newhall Valencia Realty in Saugus.
Artemis Santillan paid $398,000 for a three-bedroom, 2 3/4-bath condo in Santa Clarita in 2004. She had tried to sell on and off since late last year. Finally slashing the price by $10,000 to $529,000 and raising the agent commission to 4 percent, Santillan got an offer in October. While she made a handsome profit on her investment, Santillan bemoans what she could have sold the condo for during the boom years.
``I could have gotten $589,000 to $600,000 during the peak,'' she said.
Like a lot of Californians, Arlis Dowd and her husband bought a second house before selling the first under the assumption that selling would be simple. The Dowds bought a home in a golf course community in Banning early this year, then put their three-bedroom 1950s home in Covina on the market in February, expecting it to sell quickly for the $565,000 asking price.
But then the real estate market slowed to a crawl, and it sat, and sat, and sat. ``We had a bridge loan, so it was getting a little desperate,'' said Dowd. ``We had lowered our price, but we were chasing the market.'' Eventually, they cut the price to $500,000, and the house was snapped up by a young family.
`No one's coming by'
Cutting prices is definitely a last resort, but it's something more and more sellers are having to do, especially if they have to sell fast. Some sellers are even faced with having to lose money just to offload their houses.
Ron Slocum needs to sell his three-bedroom, two-bath home in North Hollywood before he can move into a new $700,000 house in Oxnard, where he is being transferred for his job with a phone company. It's been on the market for three months without a single bite, even though Slocum reduced the price by $70,000.
His aunt is a Realtor and she's handling the sale. ``She's having open houses and really, no one's coming by,'' Slocum said. His next strategy? An auction. If it comes to that, he'll open the bidding at $550,000 and see where it goes from there.
Diane Gonzalez, a single mother in Redondo Beach, bought her four- bedroom home 18 months ago for $670,000. She has reduced the price several times, and now it's listed for $679,000. ``This market stinks,'' she said. ``All week, nobody's come, nobody's called. ... I cannot afford to stay here.''
Gonzalez said she got into a loan she never should have been approved for based on her income. Now she is in debt and putting expenses like property taxes on her credit cards.
Despite the rosier market for buyers, Gonzalez said she plans to rent once she finally does sell her house.
``I'm 43 years old and it looks like I may be renting for the rest of my life,'' she said. ``I welcome it.''
How to sell your home fast
Basics still matter -- Nice paint and new carpet, or at least carpet in good condition, is the bare minimum.
Make it impersonal. Remove anything personal in the house, such as religious artifacts and family photos, so people can imagine themselves in the space.
Get real. Set a realistic price after researching not just comparable homes in your own neighborhood, but also look at three or four nearby communities. Buyers are looking all over, and sellers should too.
-- Daily News research
(color) HOUSE FOR SALE
How to sell your home fast (see text)
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|Publication:||Daily News (Los Angeles, CA)|
|Date:||Nov 19, 2006|
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