Sellers Living With Last Year's Expectations
This one goes out to all the real estate agents that peruse the blog from time to time. We would love to hear stories about what has been going on in your local areas and offices (post anonymous if necessary).
From RealtyTimes:
Getting the Listings Sold
"In many parts of the country, the inventory has increased and it is taking longer for homes to sell. For many who were in a very fast seller's market, these conditions are requiring a shift in strategies for them to have the success they want this year."
"Are your listings sitting on the market longer? In many price ranges, if your property isn't in the bottom 25 percent, it's just going to sit there. What's an agent to do?"
"First and foremost, the communication with your sellers is critical to their understanding of the new marketplace dynamics. Most sellers are living with last year's expectations, i.e. that they'll get 10 percent above the last sale, whereas in many places, it may well be that they will get 10 percent less! Your ability to educate them and help them modify their expectations to the new realities will keep them loyal and appreciative of your efforts."
"It is very important to avoid becoming adversarial in giving them the bad news. People get attached to their opinions and will dig their heels to defend their point of view. Instead of trying to convince them you are right and they are wrong, bring empathy and understanding into your conversations. Let them know you understand why they would think the way they are, and then say that the updated information on the market is telling us something else."
"Next, show them the facts regularly. This would include a weekly or monthly CMA report, the market absorption numbers, average days on market, and the amount they are losing each month the house doesn't sell. Then let them decide. It's their house, after all. This information sometimes takes a while for them to digest, but you are planting the seeds for them to make the decision that is right for them."
Caveat Emptor!
Grim
From RealtyTimes:
Getting the Listings Sold
"In many parts of the country, the inventory has increased and it is taking longer for homes to sell. For many who were in a very fast seller's market, these conditions are requiring a shift in strategies for them to have the success they want this year."
"Are your listings sitting on the market longer? In many price ranges, if your property isn't in the bottom 25 percent, it's just going to sit there. What's an agent to do?"
"First and foremost, the communication with your sellers is critical to their understanding of the new marketplace dynamics. Most sellers are living with last year's expectations, i.e. that they'll get 10 percent above the last sale, whereas in many places, it may well be that they will get 10 percent less! Your ability to educate them and help them modify their expectations to the new realities will keep them loyal and appreciative of your efforts."
"It is very important to avoid becoming adversarial in giving them the bad news. People get attached to their opinions and will dig their heels to defend their point of view. Instead of trying to convince them you are right and they are wrong, bring empathy and understanding into your conversations. Let them know you understand why they would think the way they are, and then say that the updated information on the market is telling us something else."
"Next, show them the facts regularly. This would include a weekly or monthly CMA report, the market absorption numbers, average days on market, and the amount they are losing each month the house doesn't sell. Then let them decide. It's their house, after all. This information sometimes takes a while for them to digest, but you are planting the seeds for them to make the decision that is right for them."
Caveat Emptor!
Grim
31 Comments:
Was down in Milford, DE two weeks back. Even the locals don't know who is buying all the new construction down there. Many were concerned by the fact that jobs were leaving Wilmington at a rather rapid pace.
grim
boycott BOB...he makes reading this blog unbearable
NJ Shore sellers are clueless for what they expect their homes to sell for. The agents are not helping by letting them list at absurd prices. There is a huge amount of homes just sitting and waiting for buyers, but it isn't happening - yet, all they do is drop the price a few thousand dollars. It is a huge waste of time and money to advertise because they are so off the mark.
A realtor just told me that this summer will sizzle! She's expecting a busy summer with all the homes on the market. I really think she meant fizzle!
2005 is over, welcome to 2006!
I happen to like Bob's posts
Re: Anonymous 2:13PM
You are on the mark with your comments regarding the Jersey shore list prices. I have spoken to several brokers I know in Wildwood Crest and questioned why they would take a listing that is not even close to market value. Their comment is the seller wanted the high list price. My comment is RE brokers shouldn't waste their time with obvious overpriced listings. Aren't the brokers supposed to be the expert.
Also, the Widwood Crest brokers have this attitude that Wildwood Crest is golden and will continue to sell in a flat or declining market. however, their inventory continues to rise significantly and anly a few listings are selling. Most of the listings are 60 to 300 DOM and are overpriced by 5-15% compared to the summer of 2005 sales prices.
Sellers are clearly basing their asking prices on what their neighbors sold their house for in 2005 + 10%. Those days are long gone as well as $700 gold. The only cure for the RE market is time. Perception is everything and it will have a much greater impact on prices - interest rates are only a small part of the equation. Realtors will continue a tug-of-war with sellers over asking price.
Let'em slug it out. Starving realtors and greedy money grubbing sellers.
HA!
Just kick back and watch the feud.
Tell'em both to shove it and it's payback time.
Substantially lower prices may make a 'few' buyers emerge. Substantial means just that substantial from 2005 peak prices. 25%+. Do NOT be a fool and use some exotic suicide loan to feel like a bigshot for a few years. the nightmare will be when rates adjust upward and your extracurricular weekend activites no longer exist.
BOYCOTT PONZI HOUSES!
Bob
In PA, all along the border with NJ, the prices are dropping 25% on many listings. So sit tight.
It took six months. Maybe because the counties lag 6 months in recording the transactions?
Some of the investor houses are sitting -they're clinging to their prices, or dropping them a few thousand.
This week and last week I saw some huge reductions, like $325K down to $298K.
Maybe the PA realtors know something the NJ ones do not.
Pat
Anon 2:12
DITTO
"Botcott Bob"
Anon 2:12
DITTO
"Botcott Bob"
Price drops are a slow process. Everyone needs to be patient. In 2007, it'll turn into a rout when 1 trillion in mortgages reset.
This market is way over-priced. The sellers are just hoping against hope that something will change to bail them out of their bad decisions. Everybody was willing to pay up as long as prices were surging (see Greater Fool theory). Now that interest rates are closer to their historical norms, no one can afford to bid higher. So here we are in a mexican standoff. Those who can afford to hold on will. Those who can't will have to reduce prices or toss the keys and walk away.
I don't know, Pesche, if you're referring to the PA drops in prices being different from NJ, maybe there's even less demand in Bucks.
Maybe there was more speculation, because the prices were lower than NJ, and now there is proportionately more inventory as a result.
Yeah, I think the quality is better. I've lived in NY, NJ and Pa. PA's better, even though there are a lot of doofuses. I'm one of them.
Are assessed values usually higher or lower than market values? The market value of my house is about 3x the assessed value right now. The price of a house I'm looking at is listed at 70,000 below assessed value.
How should the two numbers be used/compared when looking for houses? THANKS
Lower. Maybe misprint.
You think they're starting to drop now? HAH! I side with Bob.I've decided to rent for 1 more year and save more money.
Let them sweat out their mortgage payments for at least a year!!!!! The more they bleed, the more they'll realize that they're getting closer to bankruptcy or forclosure and will HAVE to sell at a reasonable price!
BOYCOTT HOUSES!
I am a PA doofus also. Bucks County stats:
May 2006 listings up 24% over May 2005.
May 2006 sales volume slightly down in good areas, down more in some less desirable areas.
Incomes and house prices lower here than North NJ. My guess is price of gas and heating oil impacting more here.
Anon @ 3:22,
Just curious - why do you think the days of $700 Gold are behind us ?
CNS
Anon @ 4:31,
The answer is it depends on the town. Some towns have had a more recent townwide assessment than others.
As a general rule of thumb, the market value of a home is greater than the assessed value.
CNS
regarding Anon@4:31's q. about tax assesment, i have been looking at these numbers as well.
It seems the bubble has created almost a factored relationship between these values. There are houses on the mkt w/asking of say 345K and they are assessed at ~100K (usually less), that doesn't seem like a good investment because come next assesment time those current taxes you see in the MLS listing are going to change quite radically.
Am i right here?
I have started to formulate a bidding offers based somewhere between the assessed value and the current asking price. (taking into account whateer i know about the town, schools, etc.)
Another thing: haven't seen any mentions about the HPI (HOuse Price Index) report that was released today: the number was NOT negative...
http://www.ofheo.gov/HPI.asp
they have a nifty calculator
Anon @ 5:51,
Guys - please start signing your posts when you post anonymously.
You are right about the factored relationship (meaning for specific towns and specific layouts in a town - at a given time - similar homes will have approximately equal ratios of home sale price to assessed price). This is one (of many ways) of trying to "desk appraise" a house and arrive at a valuation.
However, don't conclude that the market price of a house should be lower because the difference between assessed value & list price is wide (or 100K as you say). As I mentioned earlier, it depends on the town & the time of the most recent assessment. For instance - in certain sections of Parsippany in Morris COunty, a good ratio is 1.45-1.55 (meaning a sale price of $505K-$550K would be fair for an assessed value of $350K). But in Jefferson township, again of Morris County, a fair sale price is very close to the assessed valur (ratio is 1.00 - 1.10).
Finally, bloggers, please dont flame this post with arguements about why house prices should be much lower. I am only making a technical point here.
CNS
YAY.. cant wait for people to lose their homes with their stupid "real estate will appreciate infinitely" theory :D
Nice to hear from you again David..
grim
Anyone have historical info on the relationship between home builders stocks and house prices from the last bust cycle? I ask because Toll Bros stock has been cut in half. Is there anyway to extrapolate an expected drop in house prices from that?
So, if a house was recently reassesed in January at $568 and is now on the market for $499, do you think that's a good value? Or do you think it was overvalued and the taxes ($6,300) are now too high?
Its a fixer upper in a great town in the best grammar school district.
anon@10:47:
this is fkerm, I posted about bidding between assessment and asking.
As suggested by anon@10:47; would buying at a price under the assesed value allow the buyer to challenge the latest assesment
Great site lots of usefull infomation here.
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