“In fact, my taxes are going up next year and I have to pay the tax bill, so I am going to have to ask more in a month.”
It is almost impossible to convince a seller like this that the price he paid, or indeed his total costs of owning a price of property, has nothing at all to do with what he can sell it for. People have a very strong aversion to losing money and indeed become irrational about it.
When I give a listing presentation and the talk gets to price, I need to constantly have to remind the seller that I am not there to tell them what their house is worth but to tell them what I can sell it for.
“I don’t care, this is the price I need,” comes the reply when I tell them that there are dozens of similar properties listed below the price of his “need”.
The other day I was negotiating with a seller and he was trying to justify the price he was asking. He pulled out the contract to show me the high price that he paid. I then went into an explanation of the market, comparables, the number of days similar properties were languishing on the market, and how what he paid has no bearing on the discussions. He agreed with my explanation, and then told me that he is going to have to raise his price soon, to cover the additional carrying costs he has incurred because he has not sold the house for so long. Irrational, but true.
Very simply a house is worth what it is worth to others. This same seller, by the way, would never think of putting his home on the market at BELOW the market price, just because he bought $100,000 less than other buyers.
The situation gets worse, however. The buyer and sellers are the same people. What I mean by this is that nothing happens until someone sells something. There is a domino effect. We have prospects that want to buy at Parkside, for example, but need to sell their listing first.
In a market like we have today (August 2012 ) prices are rising. Many sellers will try to “lead “ the market; they want us to price the house for what they think it will be worth in 4 months. Many sellers are not aware that it is unethical for a Realtor to over to sell an overpriced house without informing the seller that the price is over market.
The message is, hire a competent Realtor, have him runs a BPO or CMA ( Fill out a form here to get one) not a Realtor that will “buy” your listing from you by listing it a high price nor one that will make you kid yourself into thinking you will still make a profit. Get one that is honest, will do the homework to determine what your home will sell for in a reasonable time frame. This is also not the time to go low budget. Get a full service professional. In selling real estate, even at the right price, you need to do everything right. ( Like premium exposure on Realtor.com like Market America Realty does). Sell your property, take your lickings, and get on with your life. Perhaps this means going back to buying lower priced homes – of which there are an abundance of in this market. This is definitely a time to buy – but you can’t get back in the game until you sell the project you have now at a “loss”. ( By the way, if you need advice on short sales click here)
The good news is that the market has turned. Offers are coming in over ask, inventory is depleted and even the News Press has gotten the message.
Market America Realty is in the middle of our Summer listing summer camp. Last Monday 46 agents gathered at the Hyatt on Route 75 in Fort Myers to learn how to help build on inventory of homes to sell. We have three more Mondays to go. Today’s hot real estate market has depleted many of our listings and we still have 600 buyers a month coming through our office. We all expect a really slamming season when the snow birds return and many will be looking for homes as well as rentals.
In other news:
Market America Naples is open and recruiting properties as well as agents. If you would like to join our team visit our recruitment page.
Our property management company, MA-Rentals, managed by Julia Schultz now has close to 100 properties under management and is looking to add at least 50 more before the end of the year. Contact Julia if you have a place you need rented or managed. (Good sample here)
Dean Street Insurance , ( full disclosure here – this is a company that we have taken an ownership interest in), was formed by real estate agents, insurance professionals, and real estate investors to cater to the real estate market. I think you will be pleased with their focus and expertise (as well as pricing). Please contact them for your insurance needs. (Agents – Dean Street is good source for E and O insurance, and Commercial Property owners – this is our sweet spot – lets Dean handle your commercial policies.)
The new homes and new construction site is up and running: visit here for preconstruction opportunities,
Looking for a lender? Click here.
Siesta Key beaches are rated with the top beaches in the WORLD and our Sarasota office specializes in Siesta Key. We have a special offer for owners right now to help build on inventory – we need homes to sell!
Finally – looking to buying for the first time? Some helpful information here.