Sellers are burying themselves...do they have a big enough shovel to dig themselves out?
I have been selling Real Estate in South Florida for quite some time. I have seen a few changes in the market since I moved here in 1999.
Before that I was a Real Estate broker in N.Y. and at that time most properties were sold at a reasonable market price and there didn't seem to be many problems with appraisals and there wasn't a high volume of inventory.
Most properties were on the market an average of 45-90 days which seemed to be normal back in the mid 90's. The company I worked for had their own niche of business. We basically sold high end condominiums and town-homes. The company was basically the only game in town with a few other companies trying to latch on to this particular niche but basically we had most of the listings and I was able to draw buyers to those listings and they were able to complete the transaction within a 45 day period.
When I moved to Florida I basically started over..getting re-licensed and had to get used to the change in the way I sell Real Estate. I concentrated on taking listings and once I established myself it was pretty easy. Then came the boom market. Properties were flying off the shelf and there were fights literally in front of the property. Buyers were out bidding each other just to be able to be the lucky purchaser. Inventory was so low that by the time I would get all my marketing up and running..the property was sold at least twice and everyone was happy.
Well...now it is a different story. I did some research back in July to see exactly what was happening. "Do you know how much inventory there is in Broward County?" If you click on the inventory link you will be able to truly see what I am talking about. There was more than 35,000 homes actively on the market. Dade and Palm Beach county figures were simular. I know that across the country many people are experiencing the same debacle. After looking over that the numbers I figure that if the current inventory stays the same and not one other property is to come on the market...."it will take at least 2-3 years or more for all these properties to sell." But in reality...there are probably at least an average of 5 new properties coming on to the market each day. There is an influx of owners starting to realize that they must act fast and constantly reduce their price to get someone to actually see them. I am also starting to see homeowners just take their properties off the market because they realize they are just wasting time with unrealistic prices.
Some are taking their properties off the market but I do not think it make a large enough impact and probably will not change anything. There are just too many properties gathering dust which is causing others to be drowning and never able to recover in time. This market will probably not change for at least another 2-3 years. We have to help the consumer understand that this will not just go away. As Realtors®we need to educate our clients and help them realize that the hole they are digging will only get deeper and there could be a few cave in's along the way.
Every time someone puts their home on the market they are picking a "wish price". But I hate to tell you that the only wish that will come true will be the longer wait time you will have to endure.
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Inventory is problem evrywhere at this time.
Funny, but it seems the public understands much better the need to sometimes take a loss on a stock or bond investment. But when it comes to real estate, they bristle at the idea that they may need to cut their losses in order to get out from under a real estate investment.
Maybe brokers in the securities industry do a better job of explaining the realities ups and downs in their marketplace.
It's funny, I've been thinking recently how unrealistic seller's expectations seem to be. The bottom line is that if there are a lot of competing homes on the market of similar size, neighborhood, etc., they need to be priced lower than the rest in order to sell.
Dale,
No fooling right? :)
Eric,
Good reason and true...they should think of it as a volatile stock that keeps changing price and then demand goes down.
Don,
When someone can go down the block 5 minutes away to buy a bigger home for 30-40 less. Most buyers will go that route so they do not have to spend more and have larger tax and insurance bills.
Neal, you're making the point I've seen phrased recently as "pricing ahead of the market or behind the market". Many sellers have been used to getting the comps and adding 10% to the price, assuming that the market would catch up to them. That's pricing behind the market. It doesn't work any more, and like you said, it will probably be a few years before prices stabilize and start going up again.
I think more sellers are beginning to realize that they can't get their "wish" prices any more. That's why some sellers are pulling out of the market - those who actually need to sell now will have to price competitively.
Neal.... as this market goes on, it seems like some sellers are more stubborn than ever. Eric makes a good point. I guess the main question would be, why do you want to sell your home. And if so, is it that important. I just wonder if some people a few years back sold just to make a profit, when in turn, they had to usually go back and buy anyhow. Making money and spending it, right? lol
I think to many realtor and owners are still using the"well we"ll start here than we can lower the price in 30 days approach. After 30 days and no showings the seller is discouraged. The home is not being kept as nice as it first was. Of course its the agents fault. And the buyers know when a home has been listed for awhile so even if the home is then priced fairly the still get lowballed. i,M STARTING TO REALIZE THAT ITS BETTER TO SKIP THE LISTING THAN WORK FOR ONE THAT IS JUST PRICED TO HIGH.
When sellers here realized they could not get the inflated price they were hoping they took them off the market. Half of those still remain and the ones that are still going are the ones who are living in reality.
Brian,
True..people were waiting for the market to catch up by selling at out of the market pricing...it worked for the most part...well now they need to go in the opposite direction.
Jeff,
The stubborn will sit and the less stubborn will sit...but maybe for less time if they are patient. Even property that is priced within the market are being stalled by values that continue to drop daily.
Hugh,
Of course..most Realtors(R) who just want the listing will end up reducing them. Even I have that happen even if it is priced right..they still reduce due to desperation and no one calling to see their property. They think it is our fault when they need to read what the media puts out. Do they even look at the fact buyers are being scared off because they have no faith with the lending industry and the insurance and tax issues they face?
Sally,
The hole just keeps on getting deeper..they might eventually hit China:)
Seller motivation is everything these days.
Tracey,
Find me some and I'll be glad to help them sell.:)
Politely inform the sellers that you are a real estate professional not a curator. Velvet ropes and proper security dont come cheap and neither do your services. Are they looking to sell or open a museum?
In my market a lot depends on the price point anything under $200 is going to sell.
Amen Neal! I am going to start calling you Pledge...dust it off!
Christopher,
More like going on a tour of a television show on site.
Leah,
Most still want to own it..that is the bottom line..when they realize what I mean then some will change their tune.
Good job Neal. Proper pricing is still 75% of your marketing strategy. Price them correctly or own them indefinitely.
Check and mate! You nailed it Neal! Pricing is sometimes the most difficult aspect to get sellers to understand, but it's also the most important!
People in my area are still clueless for the most part. My wife is a Realtor and she has a horrible time trying to get sellers to see the light and bring down their prices.
are you finding would be sellers that can not sell beause they don't have any equity and aren't able to bring a check to settlement?
on the stocks and bonds comparison, the emotional attachment of a home will always preclude people from treating its sale like a stock or bond investment. It will take more than education to get the detachment needed. As a loan officer I sometimes have clients that are affronted by a refinance appraisal if it does not meet their expectations - even if the appraisal has no material effect on the refinance.
Finding the dialog that takes people from prideful owners to market realists has got to be a very high value skill ight now.
Bill,
I think pricing is also losing steam...sellers have nothing left to do but lay blame on the people trying to help us all make a a few bucks...read the news:)
Jeffrey,
There are still a few fantasizing and will continue to wait for that bandwagon they missed...they are just a could of ...would of.
Jonathan,
I just tell them like it is and show them the history of listings on the market. It scares them when they see how many Realtors(R) they have gone through and how many reductions they have made..but hey...it is reality if they want to sell.
Max,
Yes...those people have taken their properties off the market after sucking me dry of expenses. I had to try as most were referrals ..but I got to the point where they are better off renting their property out..so I converted some to rentals. The problem is even with very good credit...the banks know the score...they are not just letting anyone refinance. They know all it is doing is adding a band-aid to the open wound.
Neal, sorry I missed this, glad it got featured so it came back up again. I had this same conversation with a client last night. Exactly.............stop digging yourself out of a hole, the hole is getting bigger. Who knows what the market will be like in 2 years ? Your inventory is HUGE !! Should I buy a condo in Florida ?
It's hard to break out of the mindset that Real Estate will always go up in value. Isn't that the reason everyone fought over the houses just a few years ago? Now those same people are selling and they don't understand the shift. It'll take time and some owners will be in a bigger hole, some will be buried, but they'll get it in the end.
Of course during desperate times, people go for more listings, overpriced or not. I'm sure you've been in a situation that you did not get a listing because the other agent quoted a higher price and did get the listing.cochin-goraka
Hi Neal, excellent topic. I'm in Titusville FL, one of the worst markets in the country right now according to (ahem) Zillow. August doesn't help much either ;-) Walking away from listings isn't easy but there's only so much time in a life and wasting it without a prayer of getting a paycheck seems, well - not fun. I'm curious about your statement regarding the market not improving for 2-3 years. I've been telling my clients/customers that with all the inventory we probably won't see much happen for a year. I think I've pretty well talked myself into believing this as well. The prospects of these market conditions going on for 2 or 3 more years is quite frankly depressing. Would you mind sharing where your numbers comes from, I may need to adjust my presentation. Thanks
Missy,
Funny...it was written a few days ago...didn't even know until you just told me.
I have plenty to chose from..come on down it is a great time to buy and hold.:)
Bill,
I just wish they would figure out that the loan they took created their own demise.
Andrew,
Just like the stock market...if you buy high and try to sell high..it is all about speculating. Wishing it will climb and then sell.
Al,
Absolutely...I know it for sure and that strategy was used by everyone ..including me...but during a market when anything would sell at any price...but I hate to tell you...those days are over...I can tell you I have lost listings by trying to price right only to lose it for a price maybe 4K higher. And I was very disappointed to see that on some I told to price at a certain number ended up selling for just that. Now those listings are just going to suck the Realtors(R) resources and I can't keep giving out my money if it has no realistic chances of selling. Is that fair to us? We are fighting about commissions when they are the ones getting paid up front..not us..we lose if they fire us due to lack of activity...the next one gets to live on our funds.
Obtaining homeowner's insurance can also be a factor. During the "boom" time buyers needed insurance coverage immediately. Now it has cooled off so I do not have the frenzy of clients that I've had during the past five years.
Jessica,
So am I ...no use taking on another problem that we have no control in solving most likely.
Gail,
Exactly! I hate walking away and in the good market I probably would not. But I won't get all stressed out if there is no possible way to sell it now. Maybe in 2 years I'll call those back and see if they are ready. I'm just renting out those that have no other choice. I'm not too big of a person ta make a few thou a week renting.:)
Greg,
Insurance? where have you been:) What I am saying is insurance is a major problem here as this tax issue that does not seemed to be resolved. I think you are seeing reduced premiums now because companies are insuring less people due to not buying property.
As everyone is digging their holes deeper I wonder if they hit water yet !
Neal, Where are all these sellers planning on going if they sell? Not back north right. With so much inventory wouldn't now be a good time for sellers to upgrade? They take a loss on their current place but they make it back by getting a big savings on a bigger place. It sounds like now is a good time for northeners to get good deals in Florida. It will be winter soon.
I think the biggest problem is homeowners do not have cash to take to the table....they cannot come down on their price. Too many have taken out equity loans, and over extended themselves. Average sales prices have fallen 7% in our area..
Melissa,
I wish more of the public would read what I write about it...but some would rather keep dreaming...like I do not want to sell it for more...don't we make more? Of course we do...but what is the sense if the banks and insurance companies do not see it that way..maybe if some higher up has the problem..maybe they will change things.
Mitchell,
I'm from NY and know exactly the difference. Yes a great time to buy and hold. rare amount of flipping going on here unless they can find a real distressed property or a property before it hits the foreclosure market.
Dawn,
I feel really bad for them,they were blinded by the light...now it is so dark that they hide.
Of course they don't...the only thing I can suggest is either try to rent and take a smaller loss from their carrying costs just to keep the home or go to foreclosure or try to get the bank to submit a deed in Lieu.
I have many in that situation...way over paid and owe more than they can get and can't get money to bring to closing because they tied up all the equity paying off the monthly payment. It truly is a mess and I bet the ones that were in brandy and cigars are now smoking the butt ends and drinking from a used glass.:)
List to live in it? Or, list to sell!
Neal, the best thing you can do for your clients and yourself is to refuse the over-priced listing. If every broker would do that the inventory problem would go away, health would be restored to the market, and prices would probably start creeping up again.
Bill Roberts
Neil,
This market has taken a toll on everyones equity, but with the changes, comes reality, and I think most sellers need to decide, Do I stay? or Do I go? They need to realize they are not getting top dollar right now, it hurts but it's the truth..
Tom Weiss
Very well put my friend and I agree 100%. Keep up the great work you do!
Neil,
Bottom line if your serious about selling get serious or wait a couple of years. This is not the market for games,good post. :)
While our situation is not currently as dire as it is in Florida, we're still seeing reluctance to adjust in the greater Seattle area and the market is slowing here. My broker says it's a matter of people wanting to sell at the high prices we had in the hot market but they then want to buy their new home for the low prices in the current market. It's a really interesting disconnect.
I think Katerina Gassett has the right approack over in Wellington, FL. Be aggressive on the expireds and sell the differences in marketing.
We're doing much better this year than last year. Last year homes priced between $200,000 and $250,000 were selling well - but the more expensive homes that we handle weren't. It was a Mexican standoff - the buyers weren't buying and the sellers weren't reducing their prices. This year some of the sellers are realistic and lowering their prices to the market - so they sell.
Jeff I have been in sales a long time and I have seen the times and bad. But that is why sales people are needed. Sales people that can adjust to market conditions and sell no mater what. That is why we are called Salesman or Saleswoman. Products that sell themselves don't need us, so we need to adapt to the need and market conditions, or find another line of work.
Good post. There is a real difference between the Professional Seller and the Successful Seller. As is your point here, the Professional Seller just keeps on owning their home. We did a really goofy post about a week ago about what happens when Greed gets into one's head. It's part and parcel of what we're all facing and doing our best communications efforts to overcome.
Thanks for this one, and thanks for taking your time to comment on something we just did. It was greatly appreciated.
Shannon,
Same meaning..just expressed differently :)
Bill,
Overpriced listings just add to the saturated market and just cause the waiting time to ling even more.
Tom,
I wish they would read what I am writing or what someone else in the media is saying....break out the shovel.
George,
Thanks and coming from a vet in this business..you know it is true my friend.
Suzanne,
I'm not a babysitter any longer...no use...why keep spending my time and money aggressively market if properties at real prices are not selling as well.
Irene,
What is also killing it is when you go from one home to another...you might end up paying more in the long run if you downsize.
Jeff,
I agree but most of the expired still list with another agent at the same price and then either reduce or linger again ...the only one that might win is the 3rd Realtor.
Sharon,
You are lucky..maybe I need to start selling by you.:)
George,
Very well put.
Gary,
No problem..reciprocation is a hard thing on AR especially when I am subscribed to by lots of people and I have my long list to procure myself.
Neal-That is a heck of a lot of inventory in Broward county. Homeowners just have to realize that if they can stay in their house for the next couple of years and ride out the storm, that is exactly what they should do rather than try to sell in this market. I hope your message gets out to many of them and maybe someday Neal The Real Deal Bloom will get credited with saving the housing market in Broward County, Florida! Aloha.
David - I just returned from a three day By Referral Only Main Event in Reston, Virginia. The presenter was Joe Stumpf of "By Referral Only." Part of his presentation addressed this very question. The direction he went in was asking the seller... "are you a "listing" or are you a "seller?"
A "listing" in his meaning could be described as simply a home put up for sale just to see if it gets any "nibbles." A "seller" is someone who puts their home up for sale, with the serious intent of selling it... pricing it correctly, and making it presentable by following up on all of the suggestions on the "honey do" list their Realtor presents to them.
Come on do you mean the Jeanie can't just "zap" the price and sell the house? For real???
Your crushing my childhood memories... I thought Jeanie could do Anything!!!!
David,
I just want to sell homes so if they want to give me credit for bringing the market back then so be it:)
Desiree,
That photo was courtesy of Flickr..kind of interesting...maybe if we rub it ..all this would just disappear.:)
Inventory seems to be the common problem everywhere right now. I know what you mean and the sellers really need to step up to the plate!
Neal - I agrre - If sellers don't want to sell, they should take their home off the market to ease the inventory situation.
Maureen,
They are just causing more inventory and it really doesn't help by trying to sell a property if it is not priced right..it just adds to the saturation problem. We are all guilty of it once in a while but after trying something that will not help ..well then we have to decided a new direction.
We're having the same problem in the Birmingham, Alabama area too. A large part of our problem is there is a lot of new construction everywhere! The problem I have with sellers is they have this dream home they want to move to and in order to obtain that they say "We've got to have X amount of dollars out of this one to get into the type of home we want." It drives me crazy! I tell people constantly the market is slow and in order to sell right now you have to price it at market value and the house you want to buy doesn't determine market value!! Neither does your need to pay off your cars, credit cards, or anything else! Great blog!
Paula,
Thats what I say.
Amber,
The inventory has saturated our market..we need to reduce that first if we want get the market up.
Neal- There has always been a big gap between the real market and where buyers and sellers perceive it to be.. We don't have the inventory problems you have but with the changes in jumbo loans we are going to see a much smaller pool of buyers and sellers don't realize the market has changed.
I think it all leads back to the Seller's motivation and price. Show them the market report each week of homes like theirs in their area that have gone under contract...let them see that price range. Also, it might help to get the other agents who tour your listing to give you their home feedback in writing by email so all you have to do is send it directly to your Client. This way your Client doesn't think you are just stating your opinion all the time regarding the price. Maybe by hearing that info from a 3rd party will help lead them to reducing their property to a price in which it will receive offers.
-Keith
RE/MAX Olympic, Manassas VA
www.MyRealtorKeith.com
Kay,
That's what I keep telling them..some homes tend to attract buyers with lower down payments or no down payments and that ain't happening much or at all here.:)
Keith,
I would love to if there were any showings...and the ones that do show can't remember which house I am talking about as they have to show many homes and they get confused. I don'y know..I know that I always write a little note next to the listing to remember what the buyer thought.
Neal, I too am reserfacing with my license. Thanks for sharing your testimony, and giving me some umph
Diane,
Thanks for stopping by and reading!
I feel your pain and even ditto your experience. I started in 1991 during the recession in So.Ca. and just relocated to Lake Norman NC two years ago. Because of the nature of the market here, I have stopped my initial effort to get listings even though I was a listing agent in CA. The relocation market is very strong here (lots are coming from FL!) so I am working with relocating buyers for the most part. Most of the listing agents here still think it's okay to start high hence sellers think so too. Until the sellers get realistic, I'm focusing on buyers and I NEVER thought I would say that!
Diane,
No pain..no gain...or should I say all pain but never a gain.:)
I've had sellers who are literally making several hundred thousand dollars on their homes whine that they are "giving them away" because they could have gotten more money for their homes 2 years ago. I try the stock market analogy but as was mentioned above, they just don't get it. We may be able to adjust, but getting the sellers to adjust their thinking is often not so easy. Unfortunately!!!
Kelly,
There is not much you can do until they realize that even if they can get more...will it appraise. HO's will soon understand that besides the banks being more strict on giving out mortgages...they will have more issues with the property appraising for more than it is worth.
Buyers and sellers are under the misconception that you will never loose money on real estate. That just is not true. You can loose at anything if you pay too much. The stock market went through the same thing.
Vicky,
I'm a home owner just like them...I wanted to make money too..I just look at it in another perspective.
Sellers need to look at the current market, not what they could have gotten 2 years ago. This is the Realtors job. To many Realtors are taking over priced listings. This the forclosures and short sales are not helping the cause. Amen Neal
Neal, great post! Motivation is always the key to taking a listing. A seller either has to sell, or they are just playing. This is not a market for that. Those that take the home off the market are in denial thinking things will be better down the road. They may be, but realistically it may be at a very differnt price.
Darin,
You can still utilize this because some sellers still don't realize it.
Jim,
Thanks...reality is all I ask for and so should serious sellers.