Today I received two different mass emails from brokers indicating that the property they were advertising was "Priced To Sell." I would normally take particular notice of an opportunity like that; but lately it seems that everything is "Priced To Sell"...yet nothing does. In fact, most things that are "Priced To Sell" certainly aren't. It leaves me wondering, "What is the definition of "priced to sell?" I wish I knew the magic formula for how to arrive at that exact "Price To Sell." It seems that for most brokers, if they list something for less than it would have sold for three years ago, then it is "Priced To Sell."
Appropriate pricing these days is very difficult to gauge. If you find comparable sales at a certain CAP rate, Gross Rent Multiplier, replacement cost, or direct comparison; and you price your property accordingly, or even for less; that doesn't necessarily mean it is "Priced To Sell." At any one time, in many markets, you can find hordes of properties all priced according to existing sales comps....but they are not moving. "Time On The Market" is extending even faster than prices are compressing for many asset classes. In Indianapolis Metro, according to RERC (Real Estate Research Corporation), every CAP rate other than Apartments is growing (prices falling) and the number of properties on the market is growing while transactional volume is falling. Those numbers don't look great, but I feel they will come back eventually. But for right now, if you are going to "Price Something To Sell" it really should be quite low (discernibly low) if you really want to sell it. The normal avenues that a broker might use to value your property are very difficult to rely on these days...it's more of an educated guess followed by a crystal ball consultation. Whatever the case, in order to actually sell something these days, you need to put a concerted effort into social media, electronic advertising, networking, and persistence. The days of putting a sign in a yard and listing the asset as "Priced To Sell" are over. Don't even get me started on "Calling For Offers!"
Posted by Scott A. Baldwin at 07:37 AM on Monday, December 6, 2010