Fairy-Princess Thinking!

My house sits in the path of the local elementary school which means that between 8:00-8:30 am Monday through Friday, I watch darling young children and their parents parade by on their way to school. (Some of the parents are darling too). As it's October, I'm already beginning to spy some of these younger tykes trying out their fairy princess and Spiderman costumes in anticipation of Halloween. (I can relate as my son all but lived in costumes year-round at that age.)

In other words, Autumn has officially arrived, as has the fall marketplace.

For Sellers and Buyers, this means that the next few weeks may be your last shot at trading or securing a home before the winter market essentially shuts down for business. It's not that we have NO sales during November, December and January, but that they are much fewer and far between. At their Realtor's suggestion, Sellers who can wait, will do so until the Spring Market arrives when Buyers reemerge in full force, creating more demand. That's the cycle that plays out year in and year out and will likely follow suit this season as well.

Like the weather, as the market cools, slows, and becomes a little less robust, we are beginning to see advertisements for homes announcing "Transparent Price!"

"What does that mean?" a new client asked me last week, confused by the description.

"It means that the list price is what the Sellers are willing to take." I said."Unfortunately, these 'transparent prices' are often what the Sellers might have received last spring, not this fall. (Timing is everything.)

Like the "Make Me Sell" button on Zillow, wherein Homeowners can list a price they'd be willing to accept should someone unannounced knock on their door and hand them a BIG, FAT, PILE OF SWEATY CASH (BTW, that's highly unlikely), "transparent pricing" only works if the price is appropriate and the property is perceived as a value. Announcing a listing as a "real price" but attaching it to an unrealistic expectation is rarely a winning strategy - transparent or not.

There's something off-putting by hearing that a house received six offers but none of them were acceptable to the Seller!?! (Hello, that's the market speaking!)

But to be fair, for years we've been advising our Sellers to price lower than the assumed sales price with the expectation that multiple offers would arrive and push their net proceeds higher still, AND for most Sellers (and their Agents) that has been a highly successfully strategy. When that particular play doesn't work, it's a sobering letdown and a bumpy, unwelcome, unhappy ride into reality and into escrow - or not - as the case may be. For Sellers who have been in the driver's seat for more than a decade, the idea that the market could suddenly soften isn't coming easily. It seems that Sellers are the last to know.

"Transparent pricing" is a nod to "Hey, Mr. Seller, multiple offers can no longer be counted on; let's try this instead." Should the market flip completely, Sellers will undoubtedly be listing for MORE than they'd accept with the expectation that any negotiations will take the final price lower, not higher, and they'd be right.

As an aside, there's no finger pointing, blame or judgement here; no one wants to believe that their house might be worth less today than it was last spring or that it might be worth still less, come next spring. And to be totally honest, even those who are highly paid to track the marketplace can't say with certainty if the trend is downward or if this is just normal fall cooling as typically experienced this time of year (that's possible too). BUT one telling sign is that the absorption rate between how many houses are available, compared to how many are actually sold, has become extended in nearly every community including San Francisco, San Mateo, Redwood City and Marin. If that's the case, can Oakland be far behind? (Uhhh, probably not.)

Anecdotally, Buyers are beginning to wonder if it makes more sense (and cents) to wait and find out . . . and therein lies the tipping point. Previously, Buyers felt a need to compete as prices continued to escalate. If that's no longer the case, they'll take their time and there goes the demand. With less demand, comes less urgency, desire, and willingness . . . and prices will drop. (Are you following the bouncing ball?)

Therefore, it's important to understand that when pricing a home for the open market, it has to offer value. Your house can be turned out to the nines or it can be a "diamond in the rough," (aka: total dump), but either way, it has to pencil out. Buyers are doing the calculations and they've never been more attuned or had so much access to public information. It's not enough to tell them WHERE you think the house will sell, you have to show them WHY. Transparent pricing? Absolutely, as long as it's supported by the numbers, instead of a wish fulfillment.

With the exception of Halloween (and every Disney animated film known to mankind), I don't think we should count on a fairy princess to arrive on our doorsteps to deliver the happy ending. Do you?

How can I help you?