As a real estate broker, Joanne English Rollieson knows how to price houses. But the cooling real estate market forced her to cut $30,000 off the $525,000 asking price for her own home in Teaneck [New Jersey].
“Buyers have a lot to choose from,” explained English Rollieson, president of English Realty in Englewood, who recently sold her four-bedroom colonial. “If sellers are motivated to sell, they need to be more realistic with their prices.”
It’s a lesson home sellers are learning all over North Jersey: After five years of record sales, double-digit price rises and frantic bidding wars, the fizz has gone out of the real estate market, both nationally and in the state.
The signs of a slowdown are everywhere. The Realtors association recently reported that the inventory of houses for sale is at the highest point nationwide since April 1993. In New Jersey, house sales dropped 16% from the second quarter of 2005 to the second quarter of 2006, the Realtors reported.
For sellers, it all adds up to one question: How to sell in a buyers’ market?
The first answer is probably the most painful: Price it realistically. Just because your neighbor got $600,000 a year ago doesn’t mean you’re going to get $650,000 – or even $600,000.
And don’t immediately dismiss low-ball offers; in this market, some agents are bringing back the old saying, “Your first offer is your best offer.”
The Realtors association’s Lereah predicts that prices will continue to drop until the end of the year, and post only modest gains in 2007. Moody’s Economy.com is less optimistic, predicting that prices will drop in 2007, especially in areas like the Northeast, where prices rose so far so fast.
Economists Richard Shiller and Karl Case, creators of the Standard & Poor’s Case-Shiller Composite Home Price Index, also recently predicted in a Wall Street Journal essay that price moves “might be squarely in negative territory by some time in 2007.”
“There is significant risk of a very bad period, with slow sales, slim commissions, falling prices and rising default and foreclosures,” they wrote.
The only people who will suffer are sellers who bought within the past year or two and paid top dollar.