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Business & Tech

For a Good Price on a Home, Watch and Wait

Homes that stay on the market too long eventually become a good deal for the buyer.

The first thing most people ask me when they walk into an open house is not, "What's the price?" It's "How long has it been on the market?"

If it's not the first question, it's usually the second. Homebuyers, particularly in the Bay Area and other historically desirable areas to live, are conditioned to believe that if a home has been languishing on the market too long, there must be something wrong with it. Even in the most sluggish housing market, the good ones always sell fast.

Unless they're overpriced.

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I've seen the most beautiful, updated and incredible homes not sell because they were overpriced. And that's where the problems begin.

It's kind of the same with people, no matter how beautiful they are, looks will only carry them so far. If the price isn't right, it's not going to sell. Period. What's more, each week it stays on the market, the seller loses more and more equity. Many savvy agents follow a rule of thumb that has proved tried and true over the years: If a home has been on the market for four to six weeks without an offer, it means it's priced about 10 percent too high.

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Smart agents will ask their seller to reduce the home by at least 7 percent at this juncture. Still, most sellers will resist this strategy and many listing agents are afraid to be this honest with them, so they reduce the home by bits and pieces. That's when you get a stale listing, and that's where the opportunity for a smart buyer comes in.

Homes also stay on the market for too long for several legitimate reasons that have nothing to do with the house itself or the price. They could be a short sale — the average short sale in 2010 took ONE YEAR to close escrow. I often tell buyers "the last man standing wins," because on a transaction taking this long, the home will go through multiple buyers and price reductions. 

Another reason homes stay on the market too long is that they might have fallen out of escrow. The buyers could have lost their job or simply changed their minds. Neither of which have anything to do with the house, but unfortunately, the seller in this situation almost always will get a lower price because, you guessed it, the house will stay on the market longer.

The moral is don't overlook houses that have been on the market a long time and don't fall into the same psychological trap everyone else does: "If no one else wants it, maybe I shouldn't either."

Evaluate the home aside from its price. If you like it, ask your agent to research its marketing history. You may have found a gem yourself, but one that was overpriced or hit a bad string of luck with a flaky buyer. Unfortunately, if this is the case, the seller is going to get less than they would have if the home had been priced correctly in the beginning.

There are plenty of statistics to prove this fact. It's their misfortune, but an opportunity for you. Even when an agent makes every effort to price a home correctly, the market can shift suddenly or four more houses pop up for sale on the same street. Then an agent has the unenviable job of recommending a price reduction.

If you see a home you like that has been on the market for a long time, or that appears to be really overpriced, watch and wait. If the seller is serious, the price eventually will begin to fall. Here are a couple of attractive and desirable homes in Clayton and Concord that have been on the market more than 60 days: 

204 Mountaire Circle, Clayton

4 bedroom, 3 bath, 2,619 square feet

$545,000

On the market for 69 days, this beautiful home is situated on a quarter-acre lot in Dana Hills, a popular neighborhood that is walking distance to downtown Clayton, backs into open space and offers a great swim club/pool and lush greenbelt areas. It has four bedrooms, plus three full bathrooms, and a bonus room with views to open space and Mount Diablo. The kitchen is updated with slab granite countertops. There's also a downstairs bedroom with an updated bathroom that features a jetted tub. There are ceiling fans in most rooms and dual-pane windows throughout. The home's price recently was lowered to $545,000 — it was $605,000 when it came on the market in March.

4416 Red Maple Court, Concord

4 bedroom, 2.5 baths

$472,000

Located in the Crossings, this home is a classic example improper pricing that presents a great opportunity for a buyer. It has been on the market for 169 days. The Crossings at Walnut Country is one of only three neighborhoods in Concord in which residents can go to Foothill Middle School and Northgate High in Walnut Creek, the top middle and high school in the Mount Diablo Unified School District. The neighborhood also offers country club-style amenities for a low HOA payment of about $100 a month, including several beautiful pools, a dog park, playgrounds, a clubhouse, security and more.

This home has a lot of updates such as newer dual-pane windows and hardwood floors, but still needs some decorating help. However, for the price tag it offers a lot of value. It's on a cul de sac and has a big living room, spacious master and a very open floorplan with vaulted ceilings. It was originally priced at $512,00 and will probably sell quickly at this new price.

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