The Los Angeles real estate market is in a correction mode right now. Is inventory low, in certain areas and prices ranges? It is, but overall, if someone really wants to buy a home they are going to find one. But gone are the days of homes coming on the market, receiving multiple offers, and I mean multiple offers, and then selling for way over asking price in a few days.
Some sellers are still under the illusion that buyers are going to pay whatever it takes to secure a home, specifically their home. And yes, there may be someone who will pay their asking price or close to it, but it is not likely. These buyers will be all cash because if the home is overpriced the buyer using a mortgage will not be able to secure a loan at that price, because the home probably won’t appraise.
The seller may have had an appraisal on their property and were told it was worth such-and-such. This kind of appraisal is not the same as one conducted by the bank providing the loan. The parameters for this kind of appraisal are not a strict as that of a bank appraisal for the purposes of providing a loan on the property. Another problem with basing the sales price of a home on an appraisal is that appraisers are not inspectors. They will walk the property and visually “inspect” it but may miss major problems with home. An example of this is a home that was priced at $1.1 million and appraised for that even by the lender’s appraiser. However, the home had serious defects, many of which were not visible to the untrained eye. After sitting on the market for months, the home eventually sold for $850K.
Two other homes that I watched out of curiosity because I knew they wouldn’t sell at the listed price did not. Both are condos in the same building. One was listed at least $400,000 over asking and the other around $100K. The first one was withdrawn and the second has been sitting on the market for several months with one price drop.
So how do you get the most money for your home? You listen to your agent. Many buyers are still using agents to help them buy and a good buyers’ agent will know the market value of the home, the same way a sellers’ agent will. The sellers will look at recent sales of similar properties, compare them to yours, and set a price accordingly. The buyers agent is going to do the same and advise their client of the true market value of the home. They are not going to be able to understand why the the price is so high and will most probably submit a lowball offer.
In the time of crazy multiple offers homes were being priced under market value and would end up selling way over the list price. An overpriced home rarely if ever sells for more than asking and often ends up selling for less than it would have if it had been priced correctly in the first place. And the longer the home sits on the market the less money the seller tends to get.
If you are serious about selling your home then you need to be serious about the price at which you are selling it. If you are not serious and are just testing the market then, who knows, maybe someone who has nothing but money may come along and buy it. But it is highly unlikely. Fair market value is the way to go.