How to Sell in the Hills

Posted by Dave Fratello on Wednesday, September 9th, 2009 at 3:56am.

Inventory in the Hill Section is still well above normal for recent years at 26, by our most recent count. (Download the MB Market Update Spreadsheets for more.)

With the newest closed sale in the sub-region posting late last week, we now have a sample of 15 sales over the past 6 months to use to suggest some advice for anyone wishing to get a listing off the actives and into the "sold" column.

In a phrase: Chop by double digits. (In percentage terms.)

That's what 11 of the 15 sales did to make a deal, and we're not talking about run-of-the-mill 10-15% discounts in most cases.

Take the most recent closed sale as an example: 881 10th originally sought $2.889m, or $89k more than the sellers had paid in April 2006.

In a stunning capitulation, they dropped to $2.150m to make a deal. That's 26% off the start price.

But that sale is no anomaly.

Chops like that have been the rule, not the exception.

As our graphic here shows (click to enlarge), 6 other closed sales chopped 26% or more off their (obviously) overly optimistic start prices. Two more chopped 24% and 25%.

That's 9 of 15 sales at 24% or more off, and we reach 11 with double-digit cuts by incorporating 2 additional sales that cut 15% and 17%.

These are symptoms of a market that is high-end and also overvalued, lacking in action and sufficient market cues.

Actually, the cues are coming in – and they're saying that most sellers who set prices in 2008, and to some degree in 2009, had a badly inflated sense of what the market would bear.

Of course, chopping 20% or more doesn't guarantee success.

Just ask the folks selling 815 2nd (speckie short sale, pictured) or 218 Anderson (dream property, once $10m, now $7m). Each property is down 30% from start, but no action.

Or 222 N. Poinsettia (overvalued double lot), down 37% and finishing its 14th month on market.

Or, finally, 114 N. Poinsettia, down 36% (UPDATED) from its start in May 2008. They took time off the market before returning at $5.495m this past February, and held firm there for 7 months. A half-million-dollar cut was made the day this story first appeared, to $4.995m.

Going back to the list of recent sales, the standouts for appropriate pricing are:
  • 1023 10th, a speckie that sold for $2.45m largely before anyone took note;
  • 620 9th, a big house with some rehab needs that got the spotlight here at MBC for its "aggressive" start price (see "Low on the Hill"); and
  • 929 John, a little one-story (3br/3ba, 1875 sq. ft.) with a pool on a corner lot that didn't push the ceiling and wound up selling immediately (essentially pre-market).
So it's possible to get the pricing right out of the blocks. But you might need a little help from your friends (and neighbors).
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