A new species of real
estate owner has begun to
emerge, the marathon seller.
Maybe you have them in your
community, owners who
believe in real estate
exceptionalism, the idea
that their homes are growing
in value while real estate
prices all around are
stalled or falling. These
owners truly believe that
somehow their property is
unique and different, a home
so wonderful that general
sale trends are irrelevant .
Compared with last
August, in my area we have
evolved from a strong
seller's market to something
which has more balance.
Prices are up a touch, but
not up insanely. Days on the
market have doubled, unit
sales are down 20 percent
and instead of paying
premiums some buyers are
getting "seller
contributions" at closing.
How can you spot a
marathon seller? Here are
some clues:
The home has been on the
market 400 days while local
properties typically take 88
days to sell.
A look at the MLS in
August shows a home with
snow.
The property has fewer
visitors than a forgotten
cemetery.
When the listing expires
no broker steps forward to
instantly re-list the
property.
When finally re-listed,
the property has a higher
price -- even though it
could not be sold at a lower
value.
Much of what we're
seeing in today's
marketplace has no relation
to reality. Immovable prices
seem designed more to
enhance throbbing egos and
party-talk bragging rights
rather than produce sale
results.
Surely it makes sense
for sellers to test the
market, to select the
highest possible price they
realistically think they can
get. But marketing tests
should not continue
eternally. After a
reasonable time on the
market -- the term
"reasonable" being different
for different markets and
different properties --
owners should have some
sense of what's real and
what isn't.
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Unrealistic prices not
only lead to marathon
selling periods, they also
produce excess costs. There
are mortgage and utility
payments to be made each
month as a home languishes
on the market, plus the tax
bill grows.
Worse, if a
replacement home has been
purchased and the first
property remains unsold,
there may well be two
mortgages and two sets of
taxes and utilities.
Given that many
households can barely
tolerate one set of
ownership costs, doubling
such expenses hardly seems
attractive. A house with
expenses of $3,000 a month
that stays on the markets
for months on end means the
eventual sale price has been
effectively cut by thousands
of dollars.
Longer selling times
also change broker
economics. The old
expression is that brokers
who are not careful "can
list themselves into
bankruptcy" by taking on too
many homes that do not sell
-- or do not sell within a
reasonable period. Why?
Because each property must
be advertised and marketed
and such things are not
cheap. Owners, having once
established in their minds
what a property is worth,
sometimes see any lower
price proposal as a "loss"
when that's not the case.
For instance, imagine
a home that will not sell
for $750,000 -- but it might
sell for $700,000. To the
owners who dreamed of the
first price, this is a
$50,000 "loss" even though
they never had a sale at
$750,000.
In an environment
where prices are rapidly
rising you see buyers more
willing to take a chance
because there's some
certainty that replacement
buyers can be found if
necessary. But slow the
market and both the math and
philosophy of home buying
changes. Buying is more
risky because a quick
re-sale at a good price is
less assured.
Slower markets also
change the math and thinking
needed to be a successful
seller. Alas, some sellers
have yet to understand that
when the marketplace slows
it slows for everyone.
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