If home sellers don't deploy marketing efforts necessary to move a home in a tightening market, they will condemn their listing to open house purgatory where selling gets really hellish.
Take a cue from the big boys.
Red Bank, N.J.-based and financially beleaguered homebuilder Hovnanian Enterprises Inc. recently conducted a weekend sale, largely on high end homes, reducing prices by hundreds of thousands of dollars.
One $1.1 million dollar model's price was slashed to $862,000 and a $1.2 million model lost $300,501 in the checkout lane.
The company was banking on the clearance sale to boost sales in the builders tightest markets many of which led the housing boom and are now leading the housing bust.
The sale, called the "Deal of the Century," was to be held in 18 states including California, Florida, New Jersey, New York, Arizona, Ohio and Illinois with discounts more typically of up to $150,000 on homes.
It was spawned by the current housing downturn, which, among other conditions, is expected to generate the nation's first year-over-year median resale home price decline in more than half a century.
When prices get down and dirty, chances are they'll stay there for a while.
UCLA Anderson Forecast senior economist David Shulman says the housing market recovery will look more like an "L" curve than a "V."
Hovnanian CEO Ara Hovnanian agrees.
He told Bloomberg News the housing market is near the bottom but won't recover until 2009.
Moody's Investors Service, Standard & Poor's and the National Association of Realtors all say the housing decline will extend at least into next year.
Today's housing market is shackled by a credit squeeze that makes home financing more difficult to obtain.
The squeeze comes from a growing numbers of foreclosures that could exceed 2 million failed homeownerships related to the mortgage morass. Many failures stem from pairing buyers with risky, but easy-to-obtain subprime mortgages and other creative financing vehicles they couldn't afford.
Foreclosures are leaving behind empty and unsold homes, swelling an inventory already bulging with investments-gone-sour and speculators' abandoned properties.
Even as the market began to unravel in many locations, home prices continued to rise, boosted by reduced sales in the lower price as high-end homes continued to move.
Hovnanian's sale, however, is a signal the high-end market is also beginning to feel the reversal of fortunes and the entire market will soon reveal true value plunges.
It's a vicious circle that's lassoed home prices and, some say, the general economy as well.
Selling homes in many markets today takes, well, a "Deal of the Century" and existing home sellers who aren't paying attention will pay the price.
Sellers in markets where a downward price spiral has already begun need to be on alert for a high-end induced bump down in prices, added pressure that could force more air out of the market.
How? If you have to be in the market to sell now, you'd better be motivated because buyers, short on cash and suffering from sticker shock, are having a hard time with concept.
In previous market downturns, sellers found themselves chasing the market down, repeatedly lowering prices on the listing, but not enough to keep pace with the market's rate of falling prices.
Talk to a real estate agent in your market about pricing a home today, to sell tomorrow in markets with long average days on the market. Otherwise, by the time buyers get around to your home, it'll be priced higher than new listings just coming on the market.
Even if your price is competitive, if your home has languished on the market too long, more than its price will be suspect.
"Why has such a nice looking home been on the market so long?" buyers will ask, instead of exclaiming, "What a deal!"
You can also allow the buyer to otherwise cherry pick costs you'll pay, title insurance; the first year's property tax; homeowner association dues, any cost that, when reduced, helps motivate the buyer.
You can, however, take care to thoroughly evaluate the creditworthiness and document the income and job-holding potential of buyers. Many loans are failing today only because lenders never bothered to make those basic risk-lowering inquiries.
Also keep in mind, studies have shown many borrowers, especially those in certain ethnic and economic groups, were steered toward subprime loans when they were perfectly suited for a prime loan.
Lenders' current wagon circling is just that.
Just as they pioneered too far beyond the frontier of reasonable lending, they are now pulling the reins perhaps too tightly to serve perfectly creditworthy consumers who happen to remain in the hinterlands of nontraditional credit users.
