In an Era of Foreclosures, Price Your House Right

If you're looking to sell a house in Winnetka, local realt estate agent Jean Wright has one piece of advice for you: "Price it right." But finding an appropriate price for a house may not be as simple as it sounds.

Homeowners who bought their homes during the "real estate bubble" probably know they aren't going to get their original purchase price. But according to a report by Zillow Real Estate Research, those who bought during the "post-bubble" are more likely to overprice their homes when selling them now.  

Earlier:

In a July brief, Zillow data and analytics specialist Steve Brownell wrote that those who bought their homes before the real estate bubble burst seemed to be more realistic in their pricing. On the other hand, those who perceive their home purchase occurred after the crisis seemed to overprice their property in selling it. The problem is that real estate continued to depreciate, rather than "bursting" in a single instant.

These "post-bubble" homeowners may expect to make back their initial investment, or maybe even a bit more. The market is not supporting their optimism, Brownell noted.

This bears out with Wright's experience.

"People aim for the moon," she said about pricing.

According to Wright the first two weeks a home hits the market are the most important, so it's important to make sure the initial price is an appropriate one. Changing it later misses that crucial window.

A price that will sell the house might be disappointing to the homeowners. "They may not get what they paid for it," said Wright, "And that's the tragedy." 

This is a new scenario.

"It's a different market today than it's ever been before," said Wright. After an era of rising housing prices, the downturn has changed real estate. Underwater mortgages are on the rise, she added.

A mortgage is considered "underwater" when more is owed on a house than its current value. Many owners have found themselves owing more on their homes than anyone is currently willing to pay. This can lead to short sales and foreclosures.

According to RealtyTrac, foreclosures have decreased by at least a third across the country, while the Midwest remains one of the hardest hit. WBEZ radio reports that foreclosure companies, which clean and maintain foreclosed properties, are thriving these days.

There is a foreclosure market in Winnetka, but Wright doesn't think the North Shore has been hit as badly as other parts of Cook County. She said the number of mortgages underwater on the North Shore is "minuscule" compared to the statistics for the greater Cook County area.

Even if a homeowner is not underwater, and even if Winnetka and the surrounding suburbs have fared better than some other areas, Winnetka homeowners still have to be savvy in their pricing.

Wright's agency, which she has owned for 30 years, is dealing with more inventory than ever as there are a lot of houses for sale. Still, Wright maintains that a properly priced house can sell. Her proof: She and her staff have been selling them and even getting multiple offers on some properties--something that hasn't been happening for a while. 

For prospective buyers in Winnetka, the market is friendly. "The buyer is in the driver's seat," said Wright, who noted the abundance of houses gave buyers a lot of options.

"You can certainly have your choice," she said. "There's a lot to choose from."