Falling U.S. home prices are “nowhere near the bottom” according to Former Federal Reserve Chairman Alan Greenspan in a recent in interview with Maria Bartiromo of CNBC. The interview, in which Greenspan expressed negative comments about our economy and speculated that the U.S. would likely end up nationalizing Fannie Mae and Freddie Mac (the largest sources of money for U.S. home loans), can be seen here. In Q2 of this year, Fannie Mae dropped 5.8 percent in New York Stock Exchange composite trading and Freddie Mac dropped 6.4 percent, according to a Bloomberg update.

What does this mean to home sellers?

If you have a need to sell (as oppose to a want), it’s imperative to aggressively price your home in order to unload it NOW. In addition to a softening market, we are faced with a seasonal slowdown as the summer nears an end. Take a look at the graph below.

When the market was jamming and home prices rapidly increasing, a home seller could throw out a price that was too high and it was just a matter of time before the market caught up and the home sold. It wasn’t until the market turned in 2005 that overpricing a home became detrimental. In our current market, when home sellers overprice their home, they end up “chasing the market” with price reductions without ever reaching the optimum price that produces a sale. The result is a high number of days on market and low selling price. Now take a look at the next graph.

By pricing your home ahead of the market from the get-go, you are able to sell quicker and for higher dollar. Lesson learned: The market shift is here. The seasonal shift is coming. By hoping for a few extra bucks, you could be setting yourself up to lose many. If you’re in a “need to sell” situation, contact a professional real estate consultant to learn how to price your home to sell in this unique market. If you are in a “need to sell” situation and are afraid that the “right” price is less than what you owe, make sure to talk with your Realtor about the possibility of a short sale.

This entry was posted on Friday, August 1st, 2008 at 2:16 pm and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.