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Smart Moves

Detecting the (For-Sale) Signs of a Strong Market

April 26, 1998|ELLEN JAMES MARTIN | SPECIAL TO THE TIMES

Are for-sale signs sprouting like spring flowers in your neighborhood? Then don't make the common mistake of thinking your community has lost its luster.

Instead, it could mean that homeowners think this is the moment to get top dollar.

"But don't judge the vitality of a neighborhood just by the number of for-sale signs," said Lani McKennon, a broker-associate with Coldwell Banker in Glendale. "You also need to know how fast homes are moving."

She and other realty specialists offer these pointers for sellers:

* Count the days.

Realtors rely on a key measure--"days on market"--to determine whether a neighborhood is a vibrant sellers' market or a sluggish buyers' market.

"Days on market, or DOM, is the measure of how fast properties sell," said Donna Lasher, an agent for Century 21 Sparow in Long Beach, one of the many Southland areas where buyers outnumber sellers.

Ask your agent how long it's taking for the typical property in your community to go from listing to a firm contract, Lasher said.

This is a better measure than list-to-close, because some buyers may seek to hasten or lengthen closing schedules to for their convenience or that of the seller.

If you're a homeowner in a community where days on market are few, you can assume you're in the driver's seat, Lasher said. "The seller can be firm on terms if it's a neighborhood with fast sales."

But if you're a seller in a community where nearby homes are languishing, you'd better be flexible on terms, she said.

* Don't overprice even in coveted communities.

Every region has certain enclaves that are coveted for some exceptional attraction or an alluring cachet, McKennon said.

"Maybe your neighborhood has the best high school. Or maybe it has great horseback riding facilities and trails--a place that attracts an upscale set," she said.

Another possibility is that you may be living in a prized new gated community. McKennon estimates that "people will pay 5% to 10% more to live behind gates."

One caveat for the owner of a coveted home who needs to sell: Don't go overboard on pricing.

Every year, prospective buyers become savvier on value pricing. You may be perfectly situated near a prize-winning high school, but seeking $50,000 more than your neighbors have recently fetched for like homes could be folly.

* Look for your next home.

"If you've got many signs and homes are going fast, there's lots of confidence in your area," McKennon said. "Owners are making active, positive decisions."

Realtors generally advise against buying your next home until you've sold your last. After all, you can get yourself in a nasty jam if you've put an offer on another house before you've found a serious buyer for your current place.

But if you're a seller in an area with many signs and quick sales, you'd better have pre-shopped the trade-up market to be sure the sort of thing you're looking for is out there, McKennon said.

Otherwise, you might find yourself facing serious offers before you have a clue where you're headed.

"Go ahead and shop, but don't buy until you sell," she advised.

* Offer agent incentives in a slow-selling area.

Even within a strong regional seller's market, there can be communities that are faring poorly.

Maybe they've just lost a big part of their economic base for instance, because of the closing of a defense contracting plant that's lost its orders.

If an employer near you suddenly sheds hundreds of workers--say through a major merger--you're likely to see for-sale signs sprout quickly. How can you compete if you're one of many all trying to move at the same time?

McKennon suggests you offer a higher-than-average commission to the selling agent, which should yield more showings.

* Take drastic steps if you're selling in a declining neighborhood.

"Perhaps the desirable area you selected years ago is now near the site of a major waste dump," McKennon said, "or maybe jets from a nearby airport now fly near your home."

Whatever the cause, the reality is that you're living in an area where values have dropped so much that many owners are unwilling to accept the low sums buyers would pay.

Are you compelled to liquidate your property in an area like this?

McKennon suggests you start with a moderate price and then, every 30 days or so, drop your price by 5% until you reach what the market will pay.

* Don't worry if for-sale signs are banned in a strong sellers' market.

You may be living in a neighborhood that doesn't allow for-sale signs to be displayed.

Although this is not ideal--because signs attract interest--you can still count on lookers if your community is desirable, said Peter G. Miller, host of the real estate desk at America Online.

Prospects will find you through computerized home-listing services. "The lack of for-sale signs is a barrier easily vaulted," Miller said.

*

Distributed by Universal Press Syndicate.

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