Priced Well, Will It Sell?

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Tracking the local real estate market is practically a hobby for Yetta Levitt of central Florida. And she has always bought and sold houses by owner, saving thousands in commissions.

But even the formidable talents of Levitt were challenged by the merciless Florida real estate market when she decided it was time to sell her family’s large waterfront house and downsize to a smaller house nearby.

Levitt was one of four winners in ForSaleByOwner.com’s “Is Your House Priced Right?” contest, which invited homeowners around the country to submit short essays explaining what they thought their houses were worth, and why. The prize package included an appraisal to find out once and for all what the house is worth.

Levitt’s meticulous process started in September 2009 with a formal appraisal. Verdict: $698,000. She put the house on the market at that price. After all, the rise in local foreclosures would not affect a house bordering water and overlooking a nature preserve, with a pool and other amenities beloved by outdoorsy Floridians?

Homeowners often underestimate the impact of foreclosures. But especially in markets dominated by foreclosures, such as Florida, all property values are affected.

That’s what Levitt discovered. The house did not sell. In March 2010, Levitt dropped the price 20% to $558,000. “Initially I was reluctant to admit that foreclosures and short sales should factor in. Then reality dawned and I realized, you can’t avoid using distressed sales as comps,” she says. “I’ve always bought and sold by owner, over 25 years, my own homes and for my mom. In all that time I would have been highly offended by a 20% discount. But, it is what it is.”

Even that splash of cold reality didn’t move the house. What did it take? Tune in later this week, or cut to the chase.