Sellers Are Motivated to Use Imaginations : Home resales: Sign on the dotted line and owner may offer you the moon.
Robert Gallas’ home has been on the market for more than 6 months now with nary a nibble.
The self-employed financial consultant says two stints with different real estate agents failed to generate much interest in the house--a situation he blames in large part on his mailing address.
The home is in a well-kept area of North Tustin, but that isn’t part of any city so the post office has decreed that the legal address is Santa Ana, whose urban, polyglot image makes it a tougher sale.
“If this place was on the other side of Newport Boulevard (in Tustin), it would sell in a minute,” said Gallas, who believes that the glutted market makes it even harder to get agents to work to move hard-to-sell properties.
So Gallas has decided to try his own marketing scheme.
The gimmick: Each week, for an unspecified period of time, Gallas will slash $5,000 from the $434,900 asking price--already down from an initial $465,000--for the five-bedroom, four-bath, 3,300-square-foot home, located in a 30-year-old neighborhood right out of “Leave It to Beaver.”
He said he’s not afraid the tactic will simply drive the price down. “People will hear about it and come look out of curiosity, but someone will fall in love with the place and make an offer because they won’t want to chance losing it to someone else by waiting for another week or two,” he figures.
Besides, at $5,000 a week, it will take 2 months just to effect a 10% reduction in Gallas’ current asking price.
Time will tell whether his strategy works. But one thing already is clear: He is just one of a growing number of frustrated homeowners who have been forced to become marketing mavens as the pace of resale activity in once-hot Orange County slows.
This means that many homes that 2 years ago stayed on the market for just a few days, now take a month or more to sell. And some high-priced homes linger a lot longer.
According to statistics compiled by the East Orange County Board of Realtors, the average single family home in the $200,000 to $249,000 price range that sold in July was on the market for 70 days--up from 35 days in July, 1988. The average detached home in the $300,000 to $399,999 range was on the market 111 days before selling in July--contrasted with 58 days market time 2 years ago and only 53 days last year.
And the economic and political uncertainty now sweeping the nation means the market probably will get even slower before there is any chance of improvement, veteran real estate agents say.
One tactic that seems to be gaining in popularity--especially at the higher end of the market where sellers have a lot of equity to make deals with--is offering a bonus to the real estate agent who brings in a buyer.
Hana Simon, an agent with Century 21 Professionals in Irvine, said she has one client who is offering a 4% commission plus $5,000 to any agent who brings in a buyer. That’s in addition to the 3% commission Simon receives as the seller’s agent.
Simon said incentives paid directly to agents “are popping up because there are so many homes on the market that sellers feel they have to do something to make their home stand out” to brokers and sales people.
Dan Slater of Orange Realty Associates in Orange said there is an overabundance of listings--area realty boards estimate there are about 20,000 homes on the resale market in Orange County today. Buyers are in short supply and imagination is needed to make a sale.
In most cases, the plan of attack when a home hasn’t moved in a decent interval is for the seller to lower the price or offer to help potential buyers with down payments--often hard for people to scrape together at today’s prices--by carrying back a small second mortgage.
Sometimes, a seller gets more colorful and offers a free trip to Hawaii or a cruise along the Mexican Riviera, said Larry Marsters, owner of the Help U Sell realty franchises for Orange, Villa Park and Anaheim Hills.
“But mainly, we see people coming in and offering to pay the buyer’s non-recurring costs, like escrow and title fees, or saying they’ll pay the points. Things like that make it a little easier for buyers.”
In addition, because Help U Sell clients do a lot of the marketing and sales work themselves, the company charges a reduced rate, generally considerably lower than the standard 6% commission. The fees vary depending on locale and price, but Marsters said his office would charge $5,990 for assisting in the sale of a $300,000 home--about $12,000 less than the full service brokerage fee of $18,000.
“So a lot of times, people will come to us after their house has been on the market for a while, and they’ll reduce the price by the difference between the full commission and our fee,” he said.
Robert Miller, a retired Rockwell Corp. manager, said he found one more way to move a property.
He’s been trying through a real estate agent to sell a $279,000, four-bedroom home in Dana Point for 3 months and didn’t have one inquiry. When Miller’s contract with the agent expired, he began advertising the house himself, offering it for sale, for lease or for lease with an option to purchase.
“The lease and lease-option were the magic ingredients,” he said. “I got 35 or 40 calls in 2 weeks and recently leased it to a couple who took an option to buy. And the option even had a built-in inflation factor so I won’t get hurt if the market takes off again.”
A seller has to abandon the idea that the only way to dispose of a property and get money out of it is to sell outright, Miller said. But once that hurdle is passed, “leasing or selling gives both you and the buyer a lot of room to maneuver. And you can take a signed lease to the bank and borrow on the property.”
TODAY’S HOUSING MARKET: A TOUGH SELL
After two years of double-digit price increases, the housing market in Orange County has slowed dramatically, and homes in many areas are waiting longer to find buyers in comparison to the selling frenzy of two years ago. The figures below show the number of days homes in various areas of the county were on the market before selling:
SADDLEBACK BOARD OF REALTORS
Single-family residences, resale only.
Days on the market July 1990 July 1989 July 1988 1-30 58 71 215 31-60 43 73 51 61-90 44 53 25 91-120 31 32 11 120+ 21 11 6
NORTH ORANGE COUNTY BOARD OF REALTORS New and resale single-family residences and condominiums.
Days on the market July 1990 July 1989 July 1988 1-14 48 82 53 15-28 53 115 47 29-42 53 93 36 43-57 51 54 87 58-72 44 58 102 73+ 134 103 256
BUENA PARK BOARD OF REALTORS Single-family residences, resale only:
Days on the market July 1990 July 1989 July 1988 1-30 19 NA NA 31-60 24 NA NA 61-90 11 NA NA 91-120 13 NA NA 120+ 14 NA NA
ANAHEIM BOARD OF REALTORS New and resale single-family residences and condominiums.
Days on the market July 1990 July 1989 July 1988 1-30 18 NA NA 31-60 23 NA NA 61-90 15 NA NA 90-120 7 NA NA 120+ 19 NA NA
IRVINE BOARD OF REALTORS New and resale single-family residences and condominiums.
Days on the market July 1990 July 1989 July 1988 1-14 17 38 111 15-28 24 20 72 29-42 31 27 33 43-57 21 23 21 58-72 18 29 19 73+ 85 38 27
LAGUNA BOARD OF REALTORS Single-family residences and condominiums, resale only.
Days on the market July 1990 July 1989 July 1988 1-30 8 15 NA 31-60 11 18 NA 61-90 17 18 NA 91-120 11 6 NA 120+ 15 12 NA
EAST ORANGE COUNTY BOARD OF REALTORS
Single-family residences, resale only.
Avg. Days Price Range Homes on Market 1990 $200,000 to $249,000 37 70 250,000 to 299,000 17 59 300,000 to 399,000 12 111 1989 200,000 to 249,000 57 51 250,000 to 299,000 30 47 300,000 to 399,000 34 104 1988 200,000 to 249,000 58 35 250,000 to 299,000 37 41 300,000 to 399,000 32 101
Source: Boards of Realtors listed.
