Realistic pricing is the key in a sluggish market, experts say, and location helps, but some sellers are caught in a mortgage bind
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AP
Owners: Jesse and Christine Testa
Address: 7204 W. Tobi Court
City: Boise
Square feet: 1,500
Number of bedrooms: 3
Sale price: $214,000
Neighborhood: Palisades Addition
Time on market: 5 days
AP
Owners: Doug and Becky Langford
Address: 95 W. Rockford St.
City: Meridian
Square feet: 1,762
Asking price: $209,000
Number of bedrooms: 3
Neighborhood: Meridian Heights
Time on market: Since February 2007
BY JOE ESTRELLA - jrestrella@idahostatesman.com
Edition Date: 01/25/08
This is the tale of two Treasure Valley homes.
One sold five days after being listed. One has languished on the market since February 2007.
It is also a story of how over-priced homes that often sold in a day during the 2005-06 housing boom are now a drag on a single-family residential home market. And it is a story about what homeowners must endure in a down market.
The stories have a moral: Price your home realistically, and it will sell.
These two homes are part of a market that was still flooded with 6,448 homes for sale at the end of 2007, though that's 1,425 homes fewer than last summer.
The one that sold within days of its listing is a 1,500-square foot, two-story, three-bedroom home at 7204 W. Tobi Court in Northwest Boise. Owners Jesse, 31, and Christine Testa, 27, listed the home the day after Thanksgiving. By the following Tuesday, they had a buyer. Sales documents were being prepared, and earnest money had changed hands.
Jesse Testa credits the quick sale to improvements like the hardwood floors he put in on the second floor. But he also credits the couple's real estate agent, Horace Smith of HMS Realty, who had been preaching that the days of selling a home in a single day were gone, replaced by a slumping market where properties must be be priced realistically.
That advice means an owner today often has to settle for less.
"Price is very important," said Smith, who has been selling real estate since 1970. "If you can get people to do the right thing (price-wise), then they have an excellent chance of selling. If not, it's just going to sit there."
Built in 2002, the Testas' home was a narrow, two-story row house near Gary and State streets. Its attractions include wood floors in the kitchen and dining area, crown molding throughout, 9-foot ceilings and stairs carpeted down the middle with white painted wood on either side.
It was also just 15 minutes away from Boise State University, where Jesse Testa is taking business courses in hopes of moving into management at Motive Power, a Boise-based manufacturer of locomotive engines where he works as a welder. His wife is a nurse at St. Luke's Regional Medical Center in Downtown Boise. They bought the home during the housing boom for just over $150,000.
When it came time to sell, they priced their house at $214,000, which was $8,000 below its assessed value. The home immediately caught the attention of a family of four that had been living in a rental home. "I knew they had bought the house the first time they saw it," Testa said. The Testas got their asking price.
He said some residents have not accepted the realities of the current Treasure Valley single-family home market.
"We just wanted to sell our home. There was no reason to be super-greedy," Testa said,
The couple now live in a $275,000, three-bedroom, 1,800-square-foot home in Eagle, where Jesse Testa has more garage space for his collection of motorcycles.
It hasn't been nearly as easy for Doug and Becky Langford, who have had their home at 95 W. Rockford St. in the Meridian Heights subdivision on the market for almost a year. The subdivision sits just off Meridian Road near Victory Road.
Doug Langford, a financial adviser with Beneficial Financial Group, admits their first mistake was wasting the first six months trying to sell their 1,762-square-foot, ranch-style home themselves.
The couple, who have since moved to Ogden, Utah, are still making mortgage payments on the property. It has not received a single offer, despite the Langfords' decision to slash the original $220,000 price to $209,000, he said.
"And there's a good chance that we're going to cut the price again," Langford said.
Meanwhile, the couple, who are expecting their first child, are renting a basement apartment while they wait for their home to sell.
But at $209,000, the house is still priced well above its assessed value of $185,000, according to the Ada County assessor's office.
Phil Hoover, an associate broker with Re/Max West who has been in the business for 35 years - including the last seven in the Treasure Valley - insists there is rarely any correlation between the seller's asking price and the 2007 assessed value. He is not the Langfords' real estate agent.
Don McFarland, another broker with Re/Max West, says a home priced below its assessed value "is going to get my attention," but argues there are many reasons why a home may be priced lower than its assessment, including poor condition, a poor location, difficulty showing a rental house because a tenant is not cooperating, or pet damage.
Ada County Assessor Bob McQuade isn't so sure. "We may have under-valued the home by $10,000," he said. "But if it's been sitting there that long, chances are we valued it right."
Langford said his real estate agent has been after the couple to drop their price to $205,000.
"He said that if we'd drop it to $200,000 it would probably sell tomorrow," Langford said.
Shaun Tracy, an associate broker with Re/Max Capital City who tracks the local market, said there could be a litany of reasons why the Langfords' home has failed to sell.
Originally, the subdivision faced a junkyard, which "got it off on the wrong foot," he said. And part of the subdivision backs up to Kuna/Meridian Road, while another part sits adjacent to a mobile home park.
At 1,762 square feet, the Langfords' home is one of the larger ones in the subdivision. That may hurt its sale prospects, too.
"People like to buy homes next to the larger homes because it makes their values go up," Tracy said. "You always want to be the small fish in the big pond."
Finally, Tracy said, the highest price for a home in Meridian Heights in 2007 was $219,000, the lowest $149,900.
"He (Langford) needs to be at about $199,900," Tracy said.
But Langford said selling the house will not end his problems.
He said the couple owe $225,000 on the home. They purchased it using an 80/20 financing plan that amounts to two mortgages, one for 80 percent of the home's value, one for 20 percent.
It is a financial mechanism designed for buyers who don't want to pay mortgage insurance or have much of a down payment. But if a buyer defaults, he is on the hook for two mortgages, not one.
So, if the Langfords sell for $200,000, they will still need to take out a $25,000 loan to pay off the second mortgage.
"That's why I listed it at the price I did," Langford said. "I didn't want to take out a $25,000 loan, and get nothing for it."
