Steven Kruschke

By Dian Hymer

High inventory lets home buyers be pickier, demand more

We're in the midst of a challenging home-sale market in many areas. However, soft markets can provide opportunities for some home sellers. The trick is to price your home right for today's market.

The most difficult reality for most sellers to face is that prices in their neighborhood may have dropped during the last year or two. Some sellers will find that it may not make sense to sell if the probable sale price is too low.

If you have the luxury of waiting for a better market, stay put for now. Be sure to check with a knowledgeable real estate agent before you make a decision to move forward -- one who knows the local market well.

HOUSE HUNTING TIP: It is an advantageous time for move-up buyers, who may have to sell for less than they would have a few years ago. But, they may also pay a lot less for the home they buy.

A seller usually has an advantage selling when there isn't much competition from other listings. Even though the listing inventory was low in some areas at the end of 2007 and the beginning of 2008, anticipate that there will be more listings coming on the market in April and May -- the traditional home-selling season.

Today's home buyers are extremely price-conscious. If there is a lot to choose from, price will certainly be a big factor. A price that's too high for the market won't bring the desired result.

Homes don't necessarily lose value at the same rate in a soft market. In the current environment, buyers are more cautious about what they buy because they know that the property they buy might drop in value before it starts appreciating. They buy for the long term and are less prone to make compromises.

The homes that have what most buyers want tend to hold their value better in a down market than do homes that have an incurable defect. Here a few examples of defects that can't be cured: an awkward floor plan that can't be fixed, a location next to a noisy freeway or a house that is either up or down a lot of stairs.

Homes with defects that can't be corrected are easier to sell if there's low inventory, and it's a seller's market. We are now in a buyer's market. This doesn't mean you can't sell your home if it has an incurable defect. However, you will need to account for the deficiency in the price. Keep this in mind when you compare your home with one that sold recently that had level-in access, a livable floor plan, and wasn't on a busy street or next to a freeway.

The condition of your property will also be scrutinized more carefully in the current market than it would have been a few years ago. You can sell a property that has deferred maintenance. But, you will sell it more quickly and for a better price if you can repair defects and have the property looking great when it hits the market. If this is not possible, take this into consideration in your list price.

It's difficult to hit the market price for a property if there haven't been many recent sales in the neighborhood. If you miss the target and find that you're home is priced too high, lower it as soon as possible. A price reduction is no longer a stigma in this market.

THE CLOSING: Letting a listing sit on the market too long at a high price sends the wrong message to buyers and could result in a lower sale price if market prices in your area continue to decline.

Back to the top

By Arrol Gellner

Replacing items is often more costly than fixing them

The word "renovation" implies that you're replacing something old and worn out with something new and better. Yet too many so-called renovations simply involve replacing things that are old and substantial with ones that are cheap and flimsy but just happen to be new. That seems less like renovation and more like ruinovation.

If every modern building product were better than its counterpart of 50 years ago, meaningful renovation would be easy. But they're not, and so it isn't. While some things really have improved -- modern heating systems, for example, are vastly superior to those of years past -- the sad fact is that many building products are mere wisps of their former selves.

The euphemistic "economic pressures" we've all heard about -- put plainly, "greed for fatter profit margins" -- are the real culprit behind the declining quality of so many building items. The practice of outsourcing to cheap labor overseas means many name-brand products are now manufactured in places with indifferent or nonexistent quality control, regardless of what manufacturers claim to the contrary. The fact that many venerable American brands are now haphazardly manufactured in Third World countries may do wonders for corporate profits, but it won't do wonders for your home. You'll merely be replacing things that have lasted 25, 50 or even 100 years with new ones that'll break in four or five.

Therefore, before you replace any item in your home in the interest of sweeping renovation, ask yourself two questions. First: Does it still serve its purpose well? If so, it shouldn't be high on your renovation agenda -- certainly not for reasons of fashion alone.

Second: If it no longer serves its purpose, can it be fixed? Here's where many stalwart Americans seem to have lost their Yankee grit. We've slowly come to believe the fallacy that throwing things away and replacing them with new ones is easier and cheaper than fixing them. In the case of many items in a house, however, this is just plain bull.

Windows, for instance, are a frequent candidate for ruinovation, due mainly to cunning marketing by window replacement companies. Many people are talked into replacing their windows to save on utility bills, but the truth is that, in an average house, heat loss through windows makes up a relatively modest fraction of total energy use. Therefore, upgrading your home's attic insulation or even replacing your furnace would probably be a much more cost-effective way to conserve.

Moreover, no matter what the problem with a home's original windows might be, chances are it would take less money, effort and resources to have them repaired by a local window shop than it would to replace them wholesale with new ones. The fact that this approach also best maintains a home's original style is just icing on the cake.

But whether we're talking about windows, doors, flooring, hardware or plumbing fixtures, there's little to be gained by replacing sound original items en masse just to experience the brief thrill of newness. On the other hand, there is something to be lost: As often as not, you'll actually be downgrading the quality of your home, and spending good money to do it.

Back to the top

© 2006, 2007 eProspecting (a division of Dominion Enterprises), RE/MAX ACCORD, Research & Economics Department. All Rights Reserved.

Consultation with an accountant and/or attorney is recommended before entering into any financial transaction. All rights reserved. Agents and company personnel may copy; others may not reproduce materials herein without written permission of RE/MAX ACCORD.