October 6, 2008 / 10:02 AM / 11 years ago

Coldwell sets 10-day price cuts to spur home sales

NEW YORK, Oct 6 (Reuters) - One of the largest U.S. real estate brokerages on Monday said it is asking its sellers to cut listing prices by as much as 10 percent to kick-start U.S. home sales in a market plagued by a two-year price slump and near-record unsold supply.

Coldwell Banker Real Estate said some 25,000 sellers listing homes with its brokers will cut prices during its first national, 10-day sales event starting on Friday that aims to lure potential buyers off the sidelines of the worst housing market since the Great Depression.

Most owners still are unrealistic when pricing their homes, and a reduction of 10 percent or less would push the properties “over the tipping point to a sale,” according to Coldwell Banker, which is based in Parsipanny, New Jersey, and is part of Realogy Corp.

“The main driver is to bring buyers and sellers together and to increase the activity in the marketplace,” Jim Gillespie, president and chief executive officer of Coldwell Banker, said in an interview.

The $700 billion financial rescue package passed on Friday by the U.S. House of Representatives and signed into law by President George W. Bush should help unfreeze the credit markets and bolster confidence in housing, he said.

Gillespie expects the bailout to result in greater availability of mortgage money, more financing for small businesses and funding provided by car dealerships.

Still, the unemployment rate in September held at 6.1 percent, a five-year peak, as U.S. employers cut payrolls for the ninth straight month and at the steepest rate in 5-1/2 years.

“People, obviously, that have lost their jobs are not going to be purchasing homes,” Gillespie said. “However, if you look back over the last two years, we’ve had 4 million jobs created in this country and 8 million babies were born, so there’s a lot of pent-up demand.”

Prices have been a big sticking point.

By one government measure, which tracks the mostly lower risk mortgage purchased by home funding companies Fannie Mae and Freddie Mac, house prices are down roughly 6 percent from an April 2007 peak.

According to another gauge, the Standard & Poor’s/Case-Shiller index, which encompasses more risky loans, home prices have fallen more than 20 percent over two years.

Many sellers have been reluctant to slash asking prices, however, and face competition from the large number of foreclosed homes on the market at discounted prices.

A recent Coldwell Banker survey found that more than half of the real estate agents said listing prices in their market are too high to attract qualified buyers. Brokers, however, believe that, depending on the market, a price cut of up to 10 percent will be enough to stoke sales.

Kathryn Taylor is one seller who hopes that’s the case.

“The economy. No movement for our home, or even any interest, just because people are scared,” she said, explaining her decision to cut the asking price on her parents’ home in Silver Spring, Maryland, by 10 percent for 10 days.

The two master-bedroom, two-bathroom home in an over-55 community was listed in May at $458,000, undercutting several nearby sellers of the same model.

“This is the first time we’re lowering it, and we really didn’t want to do that because we listed it to sell,” she said. “We knew things were tough, but the home is a really desirable unit in a neighborhood that rarely has anything come open so we didn’t think it would have any problems selling.”

Taylor, a retired government employee, is getting “more antsy” about selling. Her father passed away last year and her mother is moving to a nursing home that costs $9,000 each month.

With stock wealth being roiled, “it’s getting more and more important to keep her afloat by selling this house,” she said of her mother.

Sellers can opt to keep their asking prices lower after the 10-day sale, according to Coldwell Banker.

Taylor, however, plans to return to her current sales price and offer incentives such as $2,000 toward closing costs or a bonus to the selling agent — a far smaller concession. (Editing by Leslie Adler)

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