New Selling Strategies Needed in South Florida Housing Market
The South Florida housing market has seen better days. As a result, smart pricing and marketing strategies are more important than ever, as sellers attempt to find the right deal for those seeking a Florida home loan.
Need evidence of the static in the area? Just in the Sarasota-Bradenton Multiple Listing Service, listings of homes and condos had soared 300 percent to 11,229 this month. Meanwhile, real estate agents are only moving 141 units per week, a decline of 40 percent from the clip a year earlier.
Everyone knows pricing will now play a major role in home sales. But not everyone agrees on what is smart.
Most Florida real estate agents are pushing sellers to come out low and competitive. Another valid point of view , however, is to keep your price high and swamp the house with buyers by offering the agents higher commissions and bonuses.
“The incentive is to make their house stand out in a crowd,” said Scott Sosso, president of Sarasota-based Prudential Palms Realty, which has about 250 agents in eight offices. “Make consumers aware that this property is a good value.”
To accomplish this goal, Sosso recently launched what his company calls “Value Priced Property.”
Example of a new selling strategy
Under this method, the client is asked to spend money he wouldn’t ordinarily to get a property pre-inspected and pre-appraised, and then to list the home for sale at or below the price. That qualifies the real estate for a warranty that covers it while it is listed and for a year after the sale. Prudential also does special advertising on this small but growing group of listings.
When you add up the inspection, the appraisal and the warranty, the approach could cost the seller anywhere from $1,000 to $3,000 more than a regular listing.
But Sosso says it can prevent many deal-killing problems by eliminating surprises before they happen.
“Most of the issues come up after we sign the [Florida home loan contract],” he said. “You want to buy the house at $650,000 but the appraisal came in at $595,000. Now you have to renegotiate the price or the buyer has to come up with another $55,000.”
On a Value Priced Property, the seller is nearly guaranteed that his house will pass the second appraisal at the agreed-upon price. Furthermore, by getting the property pre-inspected, the seller can often make smaller fixes than they might be liable for if the same issue comes up on the buyer’s inspection.
‘Drama pricing’ to attract Florida home loans
In other areas, Coldwell Banker Residential Brokerage has been coaching thousands of agents on how to persuade clients to list their homes at an asking price that undercuts those of comparable ones on the market.
The approach has been labeled by some as “drama pricing,” but at Coldwell Banker headquarters, officials reject the term.
“In our training material, we actually use ‘competitive pricing’ as the term that describes how we help keep inventory moving,” said Judy Reeves, chief operating officer for NRT Inc., which owns Sarasota-based Coldwell Banker Residential Real Estate Inc.
Regardless of what it’s called, pricing a home to sell to Florida home loan seekers is nothing new, but has gained credence as the market all over the nation has become weaker.
“When everybody is $20,000 or $30,000 over price - looking for a miracle, or to leave room to negotiate - it doesn’t work,” said David York, owner of York Real Estate Inc. of Sarasota. “What I advise my clients to do, if they want to be the next one to sell, they have to price it under every other comparable property.”
But not everybody agrees with the price-chopping strategy.
Paul Forsberg of Help-U-Sell Palm Realty in Englewood, for example, puts more emphasis on making the property attractive for his fellow agents to sell by beefing up the commission structure. Because he charges sellers a fixed fee that amounts to roughly 2 percent on a $300,000 house, he has more wiggle-room than the average agent in suggesting higher commissions for the selling agent.
That way, “We are marketing the house based on traffic, not price,” Forsberg said.
Strategies abound. In order to increase the demand for Florida home loans, agents and sellers must work together and determine what works best in slowing regional housing markets.
