So what’s next? Here’s the big decision: should you set the price high, expecting buyers will bargain you down eventually? Or should you start low to attract a lot of attention and get the inevitable discounting over with upfront?

You might be surprised how important this decision is.

Experts agree that starting high with the idea that you can always lower the price it later is a costly mistake. Pricing doesn’t just determine how much money you stand to make — it also dictates whether buyers even give your home a serious look. With so many competing properties for sale, in an extremely price-sensitive real estate market, your home has to stand out immediately as a good value or buyers will move on, unlikely to return.

You get one first shot at your home’s debut, and it’s easy to blow it.

New listings command attention. However, it’s critical that you maintain attention. To do this – your home must be “priced right” as perceived by potential buyers. Statistics indicate that the amount of traffic that a new listing gets in its first week can be as high as five to seven times what it gets in subsequent weeks. So, in other words, you lower the price later – but no one will notice. You will be broadcasting “priced reduced” to a much smaller audience of buyers and it will have the perception that your home is damaged goods.

About the Author
Brad Schmett is La Quinta’s Real Estate Market Specialist.  Brad and his team provide sellers with information and resources that help them best position their real estate for sale and they work with buyers to maximize their residential real estate investment.  Brad can be reached at (760) 880-5845 or www.LaQuintaRealEstateInfo.com.

Guess what? Your La Quinta home’s market value has direct correlation to distressed sale property prices if those short sales and foreclosures dominate your residential area.

If the home next door to you that recently sold was a short sale or bank-owned (REO) property, but all the other homes that sold in your neighborhood were not, you don’t have a problem. However, if most of the homes that have recently sold in your area were bank-owned homes and short sales, you may have a problem. That problem is – you must compete with foreclosures and short sale prices when selling your home.

Unfortunately, foreclosures and short sales are considered a part of the current real estate market – just as a “traditional” sale is. Prior to the real estate bubble of the mid-2000s, appraisers would often ignore any of the very few distressed sales when appraising a home. Now, with the local market being driven predominately by distressed property sales, appraisers pay close attention to the number of distressed sales that have closed and those presently for sale. So, what can a traditional seller with equity in their home do to compete?

Pricing A Home With Equity Against Foreclosures And Short Sales. Pricing a home has always been at best a mix of statistical data, common sense and emotions. It’s really a combination of wearing a seller’s hat and stepping into the buyer’s shoes. Keep in mind that it doesn’t matter much how much you think your home is worth if a buyer disagrees. Here are 3 questions you should answer:

1. What would make a buyer purchase your home over a foreclosure or a short sale?
2. Why would a buyer’s lender appraise your home for more than a foreclosure or short sale?
3. How much more is your home worth than a distressed sale?

The real answers may surprise you. The truth is your home is not worth a whole lot more than a foreclosure, even if you put in upgrades, if all the recent sales are foreclosures and short sales. Appraisers don’t give a huge allowance for upgrades like they used to do.

In the current market climate, buyers demand value and a “good deal”. They might buy a home that needs paint and carpeting, for example, if adding the cost of new paint and carpeting still makes that bank-owned home’s price attractive. On the other hand, if your home, with equity, is in tip-top shape and priced within the range of distressed sales, a buyer is much more likely to choose your home.

Examine Foreclosed And Short Sale Comparable Sales. Look at every similar home that has sold in your area over the past three months to determine comparable sales. The list should contain homes in your development or within a 1/4 mile to a 1/2 mile and no further, unless there are only a handful of comps in your area.  

1. Pay attention to neighborhood dividing lines and do not compare inventory from more or less desirable areas. Perceptions and desirability have value.
2. Compare similar square footage, within 10% up or down from your property, if possible.
3. Compare homes with similar ages, lot sizes and orientation, views, and home features. In La Quinta, for example, homes with a south-facing mountain view may command a higher value than those homes that don’t. Always compare apples to apples.

Interesting Local Statistics*. In the Coachella Valley during 2^nd quarter 2010, the percentage of homes that sold due to foreclosure or short sale fell to 48%, down from 54% during 1^st quarter 2010 and 60% for all of 2009.

In La Quinta, during 2^nd quarter 2010, there were approximately 375 total sales with 150 of those sales being foreclosures and short sales. Only 40% versus the valley-wide average of 48%. *Source: Wheeler’s Market Watch

About the Author
Brad Schmett is La Quinta’s Real Estate Market Specialist.  Brad and his team provide sellers with information and resources that help them best position their real estate for sale and they work with buyers to maximize their residential real estate investment.  Brad can be reached at (760) 880-5845 or www.LaQuintaRealEstateInfo.com.

The National Association of Realtors (NAR) reported that existing home sales fell last month to a seasonally adjusted annual rate of 5.37 million units, down from 5.66 million in May. Sales year-over-year were up 9.8%.

June sales still reflect the impact of a popular $8,000 tax credit, which is due to expire on September 30, 2010 after Congress extended the June 30 closing deadline.

Meanwhile, the inventory of homes on the market rose 2.5% in June to 3.99 million units. At that level, it would take 8.9 months to sell all the existing homes on the market, compared with 8.3 months of inventory in May.

The national median existing-home price for all housing types was $183,700 in June, up 1% from a year ago, according to NAR.

The report comes after government data showed Tuesday (July 20) that new home sales fell to an 8 month low in June, while the number of building permits issued in the month rose.

About the Author
Brad Schmett is a licensed by the State of California as a real estate broker and is an active member of the California Desert Association of REALTORS®. Brad has been awarded nine (9) important nationally recognized and respected professional designations. He also holds Bachelor’s degrees in both marketing and business administration. Brad resides in La Quinta, CA.

To be eligible, buyers need a contract that was in place by April 30, 2010.

The National Association of REALTORS® has estimated that about 180,000 otherwise eligible buyers were likely to miss out on the credit if the original deadline of June 30, 2010 was upheld. It’s been difficult for some buyers to get their mortgages approved on time, as lenders work through a clogged pipeline of applications.

About the Author
Brad Schmett is a licensed by the State of California as a real estate broker and is an active member of the California Desert Association of REALTORS®. Brad has been awarded nine (9) important nationally recognized and respected professional designations. He also holds Bachelor’s degrees in both marketing and business administration. Brad resides in La Quinta, CA.

Online real estate listings, virtual tours, private showings – these are just a few changes in real estate that are making open houses more of an option than a requirement for selling a home. Believe it or not, generally less than 5 percent of homes sell from open houses.

This doesn’t mean you can’t use an open house to your advantage. It is a valuable opportunity to get feedback about how your house appears to buyers. It can also be a useful tool if you have a more unique home where pictures just won’t do it justice.

Just be careful about holding open houses too often. It can send a signal that your house is hard to sell.

Some sellers may be leery about letting total strangers wander freely around their house with access to personal belongings and information.

Others don’t want a lot of looky-loos wasting their time. Plus, open houses can pose security concerns for REALTORS® sitting alone in an empty house.

About the Author
Brad Schmett is a licensed by the State of California as a real estate broker and is an active member of the California Desert Association of REALTORS. Brad has been awarded nine (9) important nationally recognized and respected professional designations. He also holds Bachelor’s degrees in both marketing and business administration. Brad resides in La Quinta, CA.

“While this ever-expanding jungle of on-line real estate information may seem difficult to cut through, the good news is that there is more information than ever available to the general public. Accurate information is never a bad thing. Remember, knowledge is power!

In the past, this information was owned and controlled by those within the real estate industry. Now, home buyers can now use virtual tours, slide shows, and videos to view homes before ever hopping in to the car, and home sellers (with technology savvy agents) can showcase the best features of their homes with these tools and reach a wider audience of potential buyers.

There has never been one “golden time” in real estate when everything was rosy. While the process may have seemed blissfully simple in the past, people were left with very few options and were often at the mercy of lenders and real estate professionals.

Now, armed with information, consumers can make better informed decisions using on-line resources as well as guidance and advice from their own agent. Home sellers in this new age of technology have access to more detailed communication with the market, and their listing agent, enabling them to truly know where their home stands in the current market and empowering them to make the best decisions for their unique situation.

About the Author
Brad Schmett is a licensed by the State of California as a real estate broker and is an active member of the California Desert Association of REALTORS. Brad has been awarded nine (9) important nationally recognized and respected professional designations. He also holds Bachelor’s degrees in both marketing and business administration. Brad resides in La Quinta, CA.

Some U.S. housing markets have faired quite well regardless of the economic turmoil of recent years. These markets share a few things in common: modestly appreciating home prices, a high affordability rating, better-than-average economic activity and a low foreclosure rate.

RealtyTrac, an online marketplace of foreclosure listings, estimates that 4.5 million foreclosure filings are expected in 2010, up from 2.8 million in 2009. This weighs heavily on the housing market. Foreclosures supply an excess of inventory that destabilizes home prices.

Louisville, Kentucky, is fairing well partially because it has a 1.15 percent foreclosure rate, the lowest in the country, and about half the national average. Louisville — as opposed to the La Quinta and greater Palm Springs, CA areas — never really encountered the boom and so it’s been less affected by the bust.

Midwestern cities such as Indianapolis, Minneapolis and St. Louis have among the best housing markets largely because they have some of the best housing affordability rates in the country. Indianapolis had the highest affordability with 96 percent of homes affordable to families making the median income.

According to Forbes, Pittsburgh, Pennsylvania, has the best housing market in the country for a host of reasons: the second lowest foreclosure rate, a housing affordability rate of 85 percent, home prices anticipated to increase 2.67 percent in 2010, and a diversified and comparatively robust economy. This stable economy is largely due to Pittsburgh transforming itself, over several decades, from a center of manufacturing to one of education and health care.

Stable economic activity is also boosting the real estate markets in Tacoma and Seattle, Washington. The housing market in Memphis has faired well and is expected to improve, largely because the city’s largest employer, FedEx, will be one of the first industries to rebound in the economy recovery.

About the Author
Brad Schmett is a licensed by the State of California as a real estate broker and is an active member of the California Desert Association of REALTORS. Brad has been awarded nine (9) important nationally recognized and respected professional designations. He also holds Bachelor’s degrees in both marketing and business administration. Brad resides in La Quinta, CA.

1. Find the best deals – with so many available deals, savvy investors should get a ton of prospects into their pipeline, weed out the duds and cherry pick only the best ones.  Stick to your criteria and walk away if the deal is not good enough because there are 10 more like it and many will offer better opportunities.
2. Generate private money and financing solutions – Financing is a challenge and cash is king.  Generate private money and have financing solutions in place.
3. Show a successful track record in good times and bad – Investors that defy the odds and have success in good times and bad are in a great position to have continued success.
4. Mitigate risk by having multiple exits – One exit strategy is not enough.  Always have backup plans, be ready for worst case scenarios and mitigate risk with multiple exit strategies.  Tremendous equity and tremendous cash flow is a must.
5. Do not take unneeded risks – Never ever do a deal that is not a smoking deal during tough times.  Do not ask questions, just do not do it!
6. Do your due diligence – Always be thorough in your due diligence.  You can avoid many unpleasant surprises when buying.  When selling, always qualify buyers with your lender so you do not waste months in escrow and have the buyer’s financing fall through.

About the Author
Brad Schmett is a licensed by the State of California as a real estate broker and is an active member of the California Desert Association of REALTORS. Brad has been awarded nine (9) important nationally recognized and respected professional designations. He also holds Bachelor’s degrees in both marketing and business administration. Brad resides in La Quinta, CA.

This year’s challenge will be interest rates. The federal government bought mortgage backed securities in order to keep interest rates low. Recently, the announcement was made that the purchase of mortgage backed securities will continue until June of this year. After that point, interest rates are expected to increase.

Bank-owned and short-sale investment opportunities will also be plentiful, but with foreclosure rates declining there may not be the continued downward pressure on prices later in the year.”

It may be premature to attempt to predict how the real estate market will turn out in 2010, but it is always interesting to watch the trends to see how they may affect us. Hopefully, they will help us prepare for the rest of the year to come.

About the Author
Brad Schmett is a licensed by the State of California as a real estate broker and is an active member of the California Desert Association of REALTORS. Brad has been awarded nine (9) important nationally recognized and respected professional designations. He also holds Bachelor’s degrees in both marketing and business administration. Brad resides in La Quinta, CA.

Smoother Short Sales

In 2009, short sales, or sales in which the seller’s proceeds are less than his outstanding mortgage debt, earned a reputation as being a slow — and often unsuccessful — process. After waiting months for lender approval only to hear “no” as an answer, many buyers have left the short-sale process frustrated and no closer to owning a home. Meanwhile, the seller is still stuck with a home he can’t afford and may have to face the painful process of foreclosure. In 2010, this problematic process should become much smoother. Lenders and real estate professionals alike are working on ways to streamline the short-sale process. More real estate companies are training their agents to do these specialized sales, and lenders will be more open to processing them.

Cash Is King

If you plan on buying a home in 2010, especially a low-priced foreclosure or short sale, be prepared for competition. Demand is high for these properties, so it’s not uncommon for bidding wars to break out over them. Real estate investors are particularly tough for regular buyers to contend with: Many investors are making all-cash offers, and banks — who are often more concerned with making a speedy sale than with getting the highest price possible — are accepting these offers over higher-priced offers where loans are involved. To stand out from the competition, make your offer as attractive as possible. That means saving up a sizable amount of cash for a down payment and making an offer that’s close to — or even above — asking price.

Rising Mortgage Rates

In 2009, the Federal Reserve bought up a massive amount of mortgage-backed securities, keeping mortgage rates at historic lows for much of the year. However, the Fed is scheduled to end those efforts in March 2010, meaning mortgage rates could jump as much as a full percentage point next year. If you’re considering buying a home, now would be the time to take advantage of historically low interest rates. If you’re a current homeowner thinking about refinancing, act now.

About the Author
Brad Schmett is a licensed by the State of California as a real estate broker and is an active member of the California Desert Association of REALTORS. Brad has been awarded nine (9) important nationally recognized and respected professional designations. He also holds Bachelor’s degrees in both marketing and business administration. Brad resides in La Quinta, CA.