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Summary
In this episode of the RE Real Estate Podcast, hosts Ben Harang and Clint C. Galliano discuss the critical importance of proper pricing from a seller's perspective. They explore various factors that influence pricing strategies, including market analysis, seller motivations, and current market conditions. The conversation emphasizes the need for realistic pricing discussions and the impact of interest rates and insurance costs on the selling process. The hosts provide insights into how to effectively analyze market data and the importance of competitive pricing to attract buyers in a fluctuating market.
Takeaways
· Proper pricing is essential for a quick sale.
· Market analysis should include active, pending, and expired listings.
· Sellers often overestimate their property's value.
· Honest conversations with sellers are crucial.
· Absorption rates indicate market competitiveness.
· Interest rates affect seller motivation significantly.
· Creative strategies are needed in a buyer's market.
· Days on market can indicate pricing issues.
· Sellers should be aware of market changes over time.
· Initial pricing can impact the final sale price significantly.
Sound Bites
"You need to get creative to sell your house."
"Pricing is critical for selling a house."
"Proper pricing is at the top of the list."
Chapters
Hosts
Ben Harang, REALTOR® La.
License #: 36589
Keller Williams Realty Bayou Partners
Mobile: 985.859.2500
Office: 985.262.4400
benharang.com
Clint C. Galliano, REALTOR®
La. License #: 995704723
Keller Williams Realty Bayou Partners
Mobile: 985.647.4479
Office: 985.262.4400
clintcgallianorealtor.com
Produced by Clint Galliano
Creators and Guests
Host
Ben Harang
Ben Harang brings over 30 years of experience as a licensed agent and currently works with Keller Williams Realty Bayou Partners. Ben’s experience includes single family residential sales, large land sales, subdivision development, building new construction residential and commercial projects and selling REO/Foreclosed properties.
What is RE: Real Estate Podcast?
Ben Harang and Clint Galliano discuss buying & selling Louisiana real estate in black & white.
Clint C. Galliano (00:27)
Clint, Good Afternoon. How you doing today? I'm doing wonderful, Ben. How you doing?
Ben Harang (00:32)
I'm doing terrific on a sunny afternoon in the middle of the week. We might look a little different than we normally look. Clint's on the road, parked somewhere, in Egypt somewhere, not driving while he's talking. So safety's in mind, but he's on mobile spot through our recording app, and it's a good chance to see how that works for us.
And welcome to this version of RE Real Estate Podcast. I'm one of your hosts, Ben Harang with Clint Galliano Our topic today is the importance of proper pricing from a seller's perspective. I have some thoughts on it, Clint. I'm going let you say a few words and then I'll kind of get into the meat of it.
Clint C. Galliano (01:29)
So the main thing that we want to get across is that we strive to price the property at a point that it has the likeliest chance of getting a contract immediately. Ultimately, it's going to depend on the goals of the seller on if they
more of the more important goal is to get it sold fast or if it's to get a price that they want. If they're going for a price that they want, then it may possibly never get sold depending on how it compares to what the market analysis tells us. And so that's what I've got to say about that.
Ben Harang (02:25)
Okay, that's good. That's good. the way we look at it from several different angles, at least I do, we find comparable as close as we can in construction size and location to where the house is located. We look at what's sold. We look at what's active on the market. We look at what's pending.
we look at what's expired, because those expires tell us a lot about the market in that if the house expired, chances are it was overpriced and didn't sell. So we have a ceiling for how high a price can go and not sell. So it kind of gives us some parameters. The lower number of days on the market a house sits, the more competitive it's usually priced.
A lot of people don't look at expires. A lot of people don't look at the actives or the pendings. They just look at the closed sales. I like to look at all of them just to give me an idea. It just kind of confirms the thought process about what the value of the house is if all of them are pointing to the same number.
the days on the market, like Clint said, is indicative of a pricing problem. The longer the house is on the market, the more overpriced it was. So by looking at days on the market, just in general, we can tell how many houses are overpriced and
by not how much they're overpriced, but the fact that they're overpriced. The expires in my mind tell you as much about the pricing as the closed sales. And generally the expires, dollar per square foot, when you plug them in are a lot more than the closed sales. So as Clint said, if you want to get your price and hang it out there, that's on you.
You know, if your house is listed, you need to have an honest conversation with whoever's representing you to have a realistic idea of the true value of your house. So we gather all the data, we put it together, and we sit down with the seller and go over it. And a lot of times the sellers want to cherry pick, well, a house across the street, so...
It's not on the list. It's probably on the list. It might have been a for sale by owner or they heard it would sold for more than it really did or they heard the house was smaller than it really is to make the dollar per square foot go up. They sometimes will overestimate the square footage of their house, which would inflate the market value of the house if somebody thinks they have 2,400 square feet.
of living area and they have 2000 square feet of living area. Just at $100 a square foot, it's $40,000. It's a difference when it doesn't sound like it's a lot of square footage difference, but when you apply $100 plus for the dollar per square foot, it adds up in a hurry. So we...
We talk to the sellers, sellers, sometimes are realistic. Sometimes they think their house is more valuable than any house on the market. It's kind of something we run into a lot. And we have an honest adult conversation with the sellers about how long it should take to sell the house.
what the pricing strategy needs to be to sell the house and see if we can come to an agreement on what the house should be listed for. Generally, the sellers are pushing to go higher and we're generally trying to hold the line to price it competitively so we can sell it. And the conversation would be something like, okay, you want to list it for
240 and it should be listed for 200. Let's list it for 240. If we hadn't had any activity in two weeks, we'll reduce it to 220. If we hadn't had any activity in another two weeks, we reduce it to 200 and go ahead and sell the house. One of the other things we'll look at is
Clint C. Galliano (07:39)
and hope that
market price hasn't dropped down below that 200.
Ben Harang (07:48)
And I've seen people chasing the values going down. have seen that. If they had priced it right initially, it would have sold. But by the time they get to that right price, that right price is no longer the right price. And it's a little bit less. So they keep chasing it. that's never a good conversation to have. But the absorption rate also plays a factor. We had a meeting.
Yesterday and we were talking about old times and economic graphs and and things like that After hurricane Katrina, we had 25 active listings in the Bayou Board of REALTORS® Everybody was buying everything up at any price Today we have over a thousand active listings in the Bayou Board of REALTORS® Population is maybe up a little bit
But when you go from 25 active listings to a thousand active listings, it becomes a buyer's market and the sellers need to get creative to sell their house. if a balanced market is one that is somewhere an absorption rate of about three to four months.
Right now we have an absorption rate of eight months, which means if we list no more properties with the rate that we sell houses a month, it would take us eight months to sell out of the inventory. So there's a lot of competition out there. So for the sellers that want to sell your house, need to sell your house, want to move up, want to move down, want to move with the grandkids or whatever your reason is,
You need to get creative to sell your house. You don't have to give it away, but you do need to get creative.
Clint C. Galliano (09:55)
And so one of the other things that I like to look at also, and this is more for demonstrative purposes to the seller, is to look at the active listings that are comparable to the subject property. So subject property is the seller's property that we're trying to sell. And the comparables are basically
like the word says, properties that are comparable to the subject property. So we find the active listings that are comparable to that subject property and show them to the sellers and especially in this type of market where we've got a lot of listings and not as many buyers as we had a couple of years ago in the aberration market of the COVID era.
Ben Harang (10:53)
you
Clint C. Galliano (10:54)
show them that you're trying to compete against all of these properties that are of a similar style, size, and finish, and they're priced here. And if you want to sell quickly, then to stand out, you don't need to be priced here because they're priced here and they're still here. They're not sold.
Ben Harang (11:24)
But I tell people, know, somebody, some people will ask, how long will it take to sell? Well, we can look at the average days on the market and it's somewhere in 140 days today from list to close. We can make your house the next house on the market to sell, pricing it aggressively and having an effective marketing campaign for the house. It's a matter of what the motivation is to the seller.
If they have to get top dollar, like you talked about, Clint, if they want to move on so they can spend more time with their grandkids, the money is still important, but it's not the motivating factor. You know, we get hung up on price a lot. And sometimes money is just not the factor. There's other underlying causes that we need to develop in our conversations with the sellers to
to find out what the true motivation is so we can try to help them meet their goals and move on with their life.
Clint C. Galliano (12:37)
That's the ultimate goal is helping sellers meet their goals.
The things we, so pricing is, it's critical. there's other things involved and we're going to cover those in other episodes, but the initial pricing is critical. one of the things we want to try and avoid is putting the property on the market at a price point that's not conducive to getting it sold.
and then having it sit on the market because we can reduce prices and eventually we'll get to a point where someone's going to make an offer and realize that, that's a I'm willing to pay that much for that property. But the big problem is, is that a house sitting on the market. The buyers in the market are going to start saying, what's wrong with that property? Why hasn't it sold?
And if the price is the issue, just by looking at the specs and the price, they'll say, I'm not paying that for that house. And if we can get them in the door to come take a look at it, do a showing, they may still respond, I'm not paying that for that house. The goal is to get buyers to look at the house and
want it enough to make an offer and hopefully a good offer so that we can get the house sold.
Ben Harang (14:23)
mmm-hmm
Yeah, I've seen over time where houses overpriced and we talk about the real price or the market price at the time and the seller's not interested in selling at that price. And they said, you know, they're not motivated. They don't have to sell it. There's all kinds of comments that a seller
will try to lead people to believe it doesn't really matter to them if they sell their house or not. Well, in my mind, if you...
Clint C. Galliano (15:10)
Oops.
Ben Harang (15:11)
Okay, we lost that. Let me pull that off the wall and we can, okay. Now I forgot where I was.
Over time, I've seen
Houses be overpriced. They're not willing to sell them for the the price that the market says they're and three months six months later the market changes and they may have gotten an offer early on for the right price and decided not to not to sell it and Three or four months later. They're begging for that same offer and those people are going on and bought another house
So if you price it too high, you may end up selling it for less than the market value of the house is today, six months from now.
Clint C. Galliano (16:17)
And that's kind of the part of the point that I was trying to get across is that the you're going to bypass that original, you know, market price that that we've advised on by pricing it high and then doing price reductions to try and catch up. You'll wind up bypassing that original price.
that someone would have gladly been happy to pay.
But at that point, they've moved on or, you know, in the case of an investor perspective, they say, well, that was that price at that time. Now I'm only going to offer this price.
Ben Harang (17:11)
We also were talking the other day about the cost of insurance and the cost of the interest rates. The interest rates affect everybody nationally the same. And it's my opinion that interest somewhere between six and 7 % is kind of the equilibrium rate. people don't like to hear that, but generally,
the historical rate is somewhere like 6.22 % over time. So if you get in the 6 % rate, it's a competitive rate that kind of gives the market a balance between buyers and sellers. A couple of years ago, we had the two and a half, two and three quarters, and you couldn't keep a house on the market. They were paying over list price and
Waving the appraisals, waving the inspections, neither of which I think are a good idea. But people were doing it, whether it was free money, cheap money, COVID, whatever the reason was, people were doing it. Well, we're not in that market today. And we talked about how many listings we have on the market there.
There are a lot of people that think about selling their house until they look at that 2 and 3 quarter percent interest rate that they have on the house. That would be replaced by a 6 and a half percent interest rate on a 30 year fixed rate home loan. So all of a sudden they're really not motivated to sell that house. It makes them feel like they like it a little more than they thought they did. But when you add the cost of insurance to it,
Sometimes it's not affordable for them to stay in the house. So there's all kinds of things to consider. Hopefully they're doing some things on a state level to address the rising cost of the property insurance in South Louisiana, Lafourche & Terrebonne Parishes, which grossly increase the cost of living here, whether you're buying a...
buy a house or rent, you're still paying for the insurance. So I still think if you're gonna live here, you better off buying than you are renting and paying somebody else's mortgage. But if you wanna sell your house, you need to price it properly at the end of the day.
Clint C. Galliano (19:57)
Yeah, I agree. I definitely agree.
Ben Harang (20:05)
All right, any other comments though? We covered it or what?
Clint C. Galliano (20:05)
All right then we got it.
I think we've done a good job of covering the topic.
I don't think that we have a whole lot more to add. I mean, we could probably tell stories, but let's save that for a story episode.
Ben Harang (20:27)
Yeah.
Said that for a rainy day You know and it is more than just price is there's prep work and everything else that we'll get to in a different in a different podcast but the price is is at the top of the Importance of the proper pricing is at the top of the list that you want to get right? So, all right. Well Clint be be careful on the road We may see you when you get back and until next time I'll have a great week
Clint C. Galliano (20:34)
That's right.
Don't forget to like, subscribe, share with your friends. RERealEstatePodcast.com, RERealEstatePodcast on YouTube.
Ben Harang (21:18)
Forget to do that, thanks for the reminder. Yeah, share it and help us get the word out. All right, y'all have a good day. Be safe on the road, Clint.
Clint C. Galliano (21:29)
Peace out.