Help! I Can't Sell My McMansion
In these tough times, even the rich find it tough to sell a house.
Jan. 15, 2008 Special to ABCNEWS.com — -- Even Martha Stewart might have a hard time selling a mansion in this market.
Sales of new homes dropped last month to their lowest level in more than 12 years. Mortgage applications have fallen to their lowest level in a year. Bidding wars are pretty much done. Homes in great neighborhoods boasting stellar architecture and well-landscaped gardens are languishing. During the boom, such properties practically sold themselves. Now, homeowners are figuring out what strategies will help unload a quality piece of real estate.
The top tip? Proper pricing, say economists, brokers and home sellers.
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A mispriced home sits on the market longer, and eventually sells for less than a similar, correctly priced home. So found John R. Knight, a professor at University of the Pacific. In his 2002 study, "Listing Price, Time on Market, and Ultimate Selling Price," he examined 3,490 Stockton, Calif., homes and found that sellers who didn't reduce their prices sold for 97% of the initial list price. Homes with a price reduction sold for 88% of initial list price.
Though Stockton isn't rife with multimillion-dollar homes, the same theory holds for trophy properties. Slightly lowballing a listing price upfront often results in a higher sales price, because it generates greater interest and more offers. It is also less likely to languish; when this happens, buyers wait, hoping its price will go further south.
"In a down market, that's a good way to go for houses that, in an up market, would have multiple offers," says Courtney Charney, a broker with Alain Pinel Realtors in Atherton, Calif. "But I would not advise that on houses that you know will sit, whether because of location, or something odd about the floor plan or some other set of issues."
Generating interest through luxurious throw-ins is another effective strategy in the high-end market, especially if you're selling a prime property, as opposed to a McMansion or median-range home. Increasingly, sellers are including cars, stereo systems, gym memberships and other high-end perks as signing bonuses.
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