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Despite the economy and difficulty many are facing in their effort to obtain financing, Rancho Santa Margarita home sales in 2008 are showing a healthy increase over the closed sale numbers for 2007. Per SoCal MLS (rounded to nearest $50.00):
October 2008 - 77 closed sales
- Closed Single Family Homes - 35 at an average price of $631,950
- Closed Condos - 42 at an average price of $304,500
October 2007 - 28 closed sales
- Closed Single Family Homes - 17 at an average of $642,750
- Closed Condos - 11 at an average of $407,750
Not too surprising, the number of days on the market for the October 2008 sales varied significantly. The home that sold the quickest was in escrow in one short day. The home on the market the longest didn’t go into escrow for 450 days. In the Rancho Santa Margarita housing market it’s all about PRICE, PRICE, PRICE.
Buyers looking to purchase a home need to be aware that listing prices for homes are all over the board. I am seeing both short sales and REO sales in Rancho Santa Margarita that are priced $50,000 to 100,000 under market value just to attract the lion’s share of interested buyers.
Those homes receive a flurry of buyer interest immediately. I’ve had to wait in line with my clients just to get in the door and take a look. The problem with this type of marketing is that buyers get discouraged wasting time touring home after home after home - none of which are even really in their price range.
A buyer sees a home advertised for $450,000 and - rightfully so - assumes the home will sell at or around that price - or even hopes a better price can be negotiated. They don’t realize that the actual market value (the value at which a buyer is willing to buy and a seller is willing to sell) is $500,000 or more - and certainly more than they are willing or able to pay. At the end of the day the buyer is tired and frustrated and back at square one.
So why do listing agents choose to market a property this way? Because it is highly effective. Real estate sales is a numbers game. A home has a better chance of selling if there is a larger pool of potential buyers. Competition drives both desire and prices. If you take two identical homes (location, floor plans, upgrades, etc.) and price one home at market value and the other well under market value, which home do you think would have more foot traffic? Which home do you think would sell faster? Which home might attract multiple offers?
There are also homes that are listed well above what I would consider to be market price. These would include properties that have little to no equity, and that if listed over market value, would constitute a standard sale, but if listed at or below market value, would become a short sale. The seller owes the bank more than the property is worth. One might also see over-priced listings from sellers who need a certain amount of proceeds or they won’t have a down payment on their new home. These are sellers who want to move, but can’t unless they net a certain amount.
And of course there are properties that are priced at or close to market value. Shocker!
The market is picking up. Sales are increasing and prices have become much more realistic. It may be time to start looking for that bargain you’ve been waiting to pick up. When you do, I recommend that you enlist the assistance of an area specialist to help navigate the way through the maze. If you wish to do your research independently there are sources such as Trulia.com, Zillow.com and Realtor.com which provide a decent amount of data on home sales and listings.
Do you have questions about short sales or bank-owned properties? Please use the contact me form if you would like me to provide additional information.
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