The Next Step

Boni and I get asked everyday “What’s happening with the market?” Defining where we are in a Real Estate cycle is not an exact science. It’s helpful to look at statistics, but stats can sometimes be confounding. Just look at the latest August sales from the LA Times on September 24, 2006…


Hollywood Hills -6.8% from Aug 2005
BHPO -9.5% from Aug 2005
Los Feliz +19.5% from Aug 2005
Sunset Strip +38.3% from Aug 2005

What’s THAT about? The stats the LA Times uses rely on houses sold this past August, compared to houses sold last August. Only one month of data is used, which accounts for the huge disparity in percentages. As you can see, this is not a reliable barometer for where the market truly lies.

Another way to look at the market is anecdotally. Boni and I are in the market everyday, and we have specific recent examples to guide us as we advise you, our clients. For example, we had a listing in the Hollywood Hills recently that was appraised in 2005 for $1,100,000. The seller thought, “Okay great, let’s price it at $1,169,000!” Knowing where the market was at, Boni suggested a list price of no higher than $1,100,000 with an ideal price of $1,050,000. But the seller (yes, it was me!) said “No, the appraisal came in at $1,100,000, and my house is the BEST house on the block in this price range… look at the VIEW!” Long story short, it sold for less than $1,050,000. I am convinced had I listened to my broker that we would have ended up over $1,050,000. I tell the story because it speaks to the mentality of buyers in this market. If a house is not perceived by buyers to be priced well, then they will take a “wait and see” attitude when it comes to writing an offer. And the truth is, as a seller, YOUR MOST EFFECTIVE TIME TO SELL YOUR HOUSE IS IN THE FIRST FEW WEEKS AFTER YOU HIT THE MARKET!” So you can see why it is so important that your house is priced right. And that price is sometimes at least 10% below the latest comps or your latest appraisal.

It’s also not fair to assign a blanket assessment of the market that holds water across the board. Every house is different and may appeal to a wide-range of buyers at any given time. The good news is that even if your house is down 10% or more from the peak of the market, you are probably still up significantly. Buyers now have the chance to be more thoughtful in their decisions and certainly have more leverage in terms of their offers and also credits they can attain during the inspection. Notice what’s happening around you (more “For Sale” signs and houses staying on the market longer). Common sense prevails and the sky is not falling! Interest rates took a dip just this week, and long-term real estate, has proven to be a great investment vehicle. Don’t try to outsmart the market and listen to your broker’s advice!

Visit our web-site at BoniandJoe.com for more information…