“They Have To Reduce With A Capital R” In Florida
The St Petersburg Times reports from Florida. “Bruce Sparks painted a bright red ‘4 SALE’ sign on his home’s roof in September, hoping to attract a buyer for his waterfront home. It was a desperate attempt by a man who had hoped to flip the house for a quick profit. Now, several months later, the house remains unsold, and Sparks is facing foreclosure, said Richard Doyle, Spark’s real estate agent.”
“‘The market shift is creating hardships for many property owners,’ Doyle said.”
“Four Percent of listed homes that sold in November, less than one-third the sales rate of a year ago. The nmber of homes for sale in Pinellas County in last month was 16,000, compared to 6,000 in October 2005. $192,000 Median price for a single family home in November, down from the January 2006 price of $210,000.”
“Sparks, who could not be reached for comment, bought his 1960s ranch-style home in March. He paid $1.32-million for the property, which last sold for $275,000 more than a decade ago.”
“Sparks then put the two-bedroom home back on the market for $1.6-million, hoping to realize a quick profit. Instead, he found himself with a home that did not sell. Faced with foreclosure, Sparks dropped the price to just over $1-million and, according to Doyle, is taking any reasonable offer to the bank in an effort to forestall foreclosure.”
“‘We hope this will be a short sale,’ Doyle said. ‘We have several offers the bank is considering.’”
The Naples News. “Despite the fact that real estate prices dropped in 2006, mortgage foreclosures were up nearly 300 percent in November in Collier compared with the same month last year, court records show.”
“People like Scott Hopkins are struggling, even though he earns more than the area median income of $66,100 a year. The three-bedroom townhouse Hopkins bought for $367,000 in November costs $9,000 a year in taxes, insurance, and mortgage insurance. By the time Hopkins pays the principal, interest and condo fees, he’s spending nearly half his annual income on housing.”
“‘How is that affordable?’ he asks, anger rising in his voice.”
“The drop in real estate prices has helped some. In 2005, fewer than a handful of single-family homes were selling for less than $300,000. Last week, the real estate MLS showed 305 single-family homes for less than $300,000. And nearly 1,000 condos were for sale for less than $250,000.”
The Herald Tribune. “In a post-boom residential market where sellers are having a tough time making buyers get out their checkbooks, both builders and individual home sellers are throwing in a lot more than the kitchen sink.”
“Southwest Florida is by no means alone in facing a downturn in housing sales. In this region, the news was even worse. Sales fell by the same third, but the median price was 11 percent lower than a year ago.”
“With the home builders wheeling and dealing, it is not surprising to see individual sellers adding special incentives to their listings. Katrina Taylor has been trying to sell her one-bedroom downtown condominium for a year. She has already reduced the asking price from $465,000 to $325,900.”
“Now she is throwing in a $5,000 bonus for the agent who shows up with a contract. ‘There are price reductions everywhere,’ said her agent, Steve Ivan. ‘I’ve got price reductions on every listing I have. They are finally facing the reality that they really have to reduce, and that is with a capital R. But this one in particular has a great bonus.’”
“‘And I am willing to throw in some of my commission money, not all of it, but I am willing to help out, and she is willing to negotiate, even at that price,’ Ivan said.”
“Steve Rinehart is getting ready to build a 114-unit subdivision in Manatee County, and he needs to clear the decks of some leftover inventory from his last project, a group of homes in eastern Sarasota County.”
“The original prices on the remaining Secluded Oaks homes were $825,000, $740,000 and $700,000. Now they are $750,000, $690,000 and $650,000. Adding fuel to the fire, Rinehart is working with a bank that will offer 100 percent financing on those homes.”
“At this particular moment, appraisals are coming in higher than transaction prices, which makes the 100 percent loan more feasible, he said. During the boom years of 2003-05, appraisals often did not meet market value. Now, the reverse is often true.”
“‘Prices are coming down, people are trying to get out and appraisals are still working with some of the market value that was during our hot time,’ Rinehart said.”
“The time to get that kind of loan? ‘While appraisals are still coming in real good,’ he said.”
“Southwest Florida’s slow-mo real estate market has Bradenton real estate agent Frank Maruca settling into the leather seats of a 2007 Lexus ES 350. Maruca has the distinction of being the only agent who took advantage of Neal Communities’ summer 2006 sales incentive program aimed at moving inventory homes the company built in East Manatee County.”
“In perhaps another sign of the times, Maruca won the prize by selling houses to his own family, one to his brother, one to his daughter and one to himself.”
Here are some Florida experts in a year end wrapup:
‘Tony Polito, the Tampa and Sarasota director of Metrostudy, a research firm that collects, compiles and analyzes residential real estate data across the country. Why did so many builders overestimate demand?’
‘A: ‘I don’t know.’
‘Masterpiece was founded in 1993, but, along with other Florida builders, the business recently pared its staff to reflect a slowdown in home construction locally. About 30 positions were eliminated, and several senior executives also left, including Masterpiece founder and President Bob Fitzsimmons.’
‘Finding a permanent town hall will be a priority in 2007 for the town of Fort Myers Beach, a project that will be helped by the flat real estate market. ‘This would be a good time for the town to make a change… because our prices are very low compared to the last two years,’ said Sandy Lepley, a broker associate on the Beach. ‘The prices are down to where they were two years ago… there are a lot of properties available.’
‘In Lee County, residential real estate experts agree the housing market in Southwest Florida has fallen considerably. When it’s slow for housing, it’s slow for commercial real estate, said Maggie Morris, a Realtor on the Beach.’
‘Right now and next year is the time they (the town) should be out there,’ said Terry Chad, assistant manager at Century 21 AAIM. ‘Our commercial is de-pressed right now … our tourists aren’t here like they were a few years ago. We’re still stung from the hurricanes,’ Chad said.’
Hey Chad,
Maybe your “stung” by the fact that everything is so unaffordable down here!
FL is being built out, more and more, for these “rich forigners, and rich baby boomers” who we feel its our birthright (as Florid-idiots) to exploit. The problem is, these people are a myth, but we continue to build more and more stuff (RE, stores, activites) around a group of people, that, frankly IMHO, does not exist.
So, no crap the tourists are not here like they have been in the past. FL is becoming a destination for the rich tourists only. Are there enough of them to support an entire state? Hell no (and that’s neglecting the other states/areas that think exactly the same thing).
“The three-bedroom townhouse Hopkins bought for $367,000 in November costs $9,000 a year in taxes, insurance, and mortgage insurance. By the time Hopkins pays the principal, interest and condo fees, he’s spending nearly half his annual income on housing. How is that affordable?’ he asks, anger rising in his voice.”
You know what F@#$YOU!!!! This has to be the dumbest prick on the planet!!! Anger rising in his voice, why? Please enjoy your losing lotta ticket with a $35,000/yr fee and instant $200,000 depreciation. You bought it, you pay for it BITCH!
“People like Scott Hopkins are struggling, even though he earns more than the area median income of $66,100 a year. The three-bedroom townhouse Hopkins bought for $367,000 in November costs $9,000 a year in taxes, insurance, and mortgage insurance. By the time Hopkins pays the principal, interest and condo fees, he’s spending nearly half his annual income on housing.”
“‘How is that affordable?’ he asks, anger rising in his voice.”
JACKASS, JACKASS, JACKASS… You bought it…
What does this guy want? Does he want me to feel sorry for him? What an IDIOT - he probably saw one too many episodes of Flip this House.
He paid $99 for the Be a Millionaire with Real Estate lecture. Good job, a$$face. You just failed.
A $367,000 with high taxes means income to price should have been below 3 and probably closer to 2. What are the odds that he was making $130,000 - $180,000? I’m guessing he makes $66,101, thus putting him over the average.
But at least it’s not himself that he is mad at.
Who cares what you are paying buddy, especially since the price always increases right? It isn’t. Well just wait two months. It’ll turn around, no problem. It could be worse, at least you are paying back principal.
It would have probably been a good idea to figure out that $367k was beyond your means before you signed that sale agreement. Hopefully, you find an honest realtor/loan officer team next time.
Who cares what you are paying buddy, especially since the price always increases right? It isn’t. Well just wait two months. It’ll turn around, no problem. It could be worse, at least you are paying back principal.
I would have probably been a good idea to figure out that $367k was beyond your means before you signed that sale agreement. Hopefully, you find an honest realtor/loan officer team next time.
‘$9,000 a year in taxes, insurance, and mortgage insurance’
That would probably come near a years rent, depending on the area. Whata dummy to be ‘angry’ after such a short time.
Denial, anger, bargaining…
If the value went up 20% instead this greedy bagholder would be boasting about his investing acumen. Let him rot.
I have a question about these pending foreclosures. Often I see sentiments about just walking away and letting the bank have it back. But that foreclosure has got to kill your credit rating. And more and more employers are doing checks on people’s credit before employment and during employment. These people will get foreclosed, possibly go bankrupt and then be unemployable.
Did anybody think any of this out? But at least prices are done declining. Oh, god, this gives me a headache. I’m going to do a few shots of Jack just to make me right this morning.
Have a safe and Happy New Year everybody. Don’t drink and drive. Don’t drink and dial. Don’t drink and call your wife by the wrong name. Don’t drink and hit on the nanny. Don’t drink and…well you get the picture.
NYC,
I agree with you, and employers do certainly run credit before hiring (some). However, I think that a foreclosure is going to become a very common thing on credit reports in the next 5-10 years. As more and more people have this black mark, it’s going to become less and less of a black mark (because all of the candidates, or most, for a position are going to be similar foreclosure histories).
The three-bedroom townhouse Hopkins bought for $367,000 in November costs $9,000 a year in taxes, insurance, and mortgage insurance. By the time Hopkins pays the principal, interest and condo fees, he’s spending nearly half his annual income on housing.
Hey Jackass, guess what? You could rent that same townhome for ~1100-1300 a month. I would guess your probably spending nearly that amount on the recurring ownership costs before you even touch the morgage (which I am assuming is 100% financing).
You never should have borrowed that much money. 3X income (with a 66K salary) is really as high as you should have gone. That would be right around 200K MAX. So, rejoice, your almost double where you should be for housing costs.
And bask in the joys of ownership my very, very misguided friend. While I rent a home with double the “cost” for about 2/3rds of what it costs you to carry your POS townhome.
Add to that, welcome to BK land, dumbazz!!
It’s been a few years since I last was in the Naples area, but I would venture that the “median income” there is not $66,100. That number sounds more like the mean income, which would be heavily skewed by a few people with more money than God.
Some other great ones in this post and thread. For example, anyone paying those prices for a house in eastern Sarasota county might as well have bought a handful of tulips. That’s cattle grazing land, you morons. And the comment from Tony Polito in this morning’s Tampa Tribune made for a humorous breakfast. He deserves txchick’s trout-slap treatment.
Happy New Year everybody.
Naples demographics:
http://en.wikipedia.org/wiki/Naples,_Florida
The median income for a household in the city was $65,641, and the median income for a family was $83,831. Males had a median income of $50,092 versus $30,948 for females. The per capita income for the city was $61,141. About 3.1% of families and 5.9% of the population were below the poverty line, including 15.1% of those under age 18 and 3.3% of those age 65 or over.
Also, much like Palm Beach, the people with more money then God don’t work anymore, so I am not sure how they would impact the mean/median income ratios.
JACKASS, JACKASS, JACKASS… You bought it…
Government attempts at silencing global warming scientists
http://www.realclimate.org/index.php/archives/2006/01/hansen-in-the-new-york-times/
Government incompentence with FEMA, policies on flood insurance…plus the love of white water views…a deadly combo.
I just saw an ad for the “Jackass 2″ DVD. Maybe the bloggers here can collaborate to produce a DVD titled, “Jackass 3, The Flippers.”
Actually, someone can probably come up with a better title.
“In perhaps another sign of the times, Maruca won the prize by selling houses to his own family, one to his brother, one to his daughter and one to himself.”
Maruca screwed his whole family to get a lexus….What a guy!!
I want to party with you Maruca.
No kidding, wonder how they will feel about dear old dad/brother when the value tanks 30%?
Maruca is about to be disowned by his family.
They can always bump him off for the insurance!
Remember the builder who said about a ‘free’ refrigerator, ‘unless you can go over to the builders house and his refrigerator is gone, you just bought the freebie’, or something like that. This guy just bought himself a Lexus with a mortgage and gets to pay the property taxes on it to boot!
“All my friends call me Cruiser.”
“They should call you “dork”.”
LOL. One of my favorite scenes in all of cinema. “If we ever get into any really heavy combat, I’ll be right behind you guys. Every step of the way.”
..or ,” you’re in a hole dude, you just gotta dig your way out”
Maruca thinks of himself as the big toe of the family. And he just shoved that big toe up everybody’s a$$.
LOL. Can you imagine what Maruca’s future Thanksgiving dinners are going to be like?
water and a toothpic.
“At this particular moment, appraisals are coming in higher than transaction prices, which makes the 100 percent loan more feasible, he said. During the boom years of 2003-05, appraisals often did not meet market value. Now, the reverse is often true. — The time to get that kind of loan? ‘While appraisals are still coming in real good,’ he said.”
Gee, aren’t appraisals supposed to reflect current value? Isn’t that what got everyone in this mess in the first place? By all means, buy the house now for 20% more than it’s actual value while you can still get 100% financing. That way when the appraisals catch up with the falling market you’ll be the proud “owner” of your upside-down house!
I have a family member that recently moved from the Miami area, were he did appraisals. He really worked to be honest in his business and that why he finally had to move. He said the appraisal business in south Florida was just to corrupt. I have another friend who works as a construction manager in the Treasure Coast area of Florida and he was always working overtime to fix all the bad work being done on the homes he was in charge of. All the lying, cheating, and unethical business practices across Florida are just mind-blowing. I am not sure you can clean up the Florida real estate market, you just have to let nature take its course (either through hurricanes and/or a market collapse). Florida is truly screwed.
I’ll say it again. Real estate is now the most corrupt (supposedly legitimate) industry in the country. Yes, it is more corrupt than the government because government corruption is but one component in the overall REIC structure. They have taken all these corruptions and mixed them together to mix the world’s biggest corruption cupcake. The corruption of Johnny Lunch Pail, Sally Realtor, Larry the Loan Guy, Lefty the Mafioso fraud specialist, Willie the Wall Street Weasel and Gary the Greased Government Employee have all come together marvelously. And they hired Julio and Jose to put together the physical $hitboxes for conning and corruption. They have combined to create a cesspool from which they all hoped to fish for great riches. South Florida is a prime example.
Bravo Bravo NYCityboy. This is the best post I have read in a while. I love it. You covered all the bases from soup to nuts. Fantastic.
Well said, NYCityBoy. The all-pervasive corruption, incompetence, and criminality that permeates Miami - a Third World cesspool under it’s contrived image of sophistication and glitter - means the RE train wreck there will be orders of magnitude worse, IMHO, than in most of the bubble markets.
You got that right — the DeBeers diamond cartel has nothing on these guys! People who would never buy a diamond for a couple thousand on 47th ave will buy a condo or house from the shysters without batting an eye.
My brother is a civil engineer and was in Florida when Andrew leveled much of the housing. None of the structures he designed and supervised were destroyed, the most damage being blown out windows. He said all he did was build to code, and that it cost no more than ten percent to do so. His inspections of structures that were destroyed caused him to think that a lot of inspectors were bought off. He had been approached by contractors on jobs he was inspecting with offers of money to go easy on the inspections. After Andrew, Florida came out with a new building code because of all the destruction, but I bet the inspectors are still making money on the side.
Not that the apprasial business down here has not been crooked as hell (and still is), but I do have to cut them a bit of a break right now.
How in the heck do you appriase something right now? The market is dead, we have 4-5 years of inventory on the market right now, every comp shows prices dropping at a pace that cannot be sustained (because, in another few years, the price will be 0). So, what do you do?
I really don’t know the answer to that question. If you appraise low (because you think that is the real value) you will kill the deal, and the market suffers further. It becomes a repeating cycle. You have to get these deals done to keep the market from just falling off a cliff (well, more then it has already done).
Anyway, I really don’t know how you place a value on something here right now. Comps are almost useless, wait a month and the new comps will look nothing like the old. And the pace of sales is so slow… And the incentives thrown around…
I don’t have much sympathy for people caught up in this bubble, but I can understand why appraisers are having such a hard time right now. By the time they sign the appraisal, the price is appraised value is probably wrong by 3+%, just from the time lag.
IMHO, an appraiser would come in at what the market comp shows and mark declining market on the appraisal . Also the appraisal should be reduced for any concessions .
So if the buyers doesnt put more cash to the loan the deal doesn’t fly . The underwriters should protect the bank ,f-ck the buyers and sellers . The same buyers and sellers will sue the bank later saying in essense that they put them into a property that the value wasn’t solid .
If the real estate agents and banks were smart they would make the greedy seller take back a second for the risk margin in a declining market .Course the stupid real estate agents out there don’t know how to even structure deals in a declining market where you put the risk on the greedy sellers part .
How about just figuring out what it would have been worth in 1998?
If there was one market that I was aching to see collapse, it was the Miami condo market. Never have I seen so much crap being peddled to so many people as the nirvana of south Florida living. I lived in Key West for 3 years in the 80’s and when I go back to SF now I am sickened by the dump it has become. The condos all along Miami Beach remind me of the block housing the Soviets threw up for their citizens. I’m sure the quality of some of these condos will live up to the Stalinist standard.
Call me a “schadenfreudist” if you must but, when I read three years ago that there were groups of “vulture funds” pooling up millions to buy these Miami trash heaps at reduced prices I had my moment of epiphany: I then knew that there was a bubble and the bust was not far behind.
Happy New Year to all of you!
Living in Miami right now, I can tell you there is an atmosphere I sense here of “calm before the storm”. Going downtown to Brickell and seeing how many units there are compared to the relative amount of people on the streets, it looks almost like a ghost town. And yet the units keep rising. After a couple more years of the banks floating all of these concrete prison cells, I picture some kind of dystopian breakdown like “Escape from New York.” Who knows.
“Katrina Taylor has been trying to sell her one-bedroom downtown condominium for a year. She has already reduced the asking price from $465,000 to $325,900. Now she is throwing in a $5,000 bonus for the agent who shows up with a contract.”
Why the price cuts and agent incentive? You’d think one bedroom condos would by selling like hotcakes. What is wrong with these people? What made her think she could slap the original asking price on her 1 bdrm condo?
People are starting to learn that ” Price does matter”.
How many people making $150,000 per year are shopping for one-bedroom condos in Miami? The sad part is that you couldn’t get anything close to that for $325,000 here in NYC. NYC will follow Miaim’s suit. It’s a matter of time. My wife and I are probably in the top 10% of earners and we are locked out of the starter market. That is messed up.
Reality will not set in until those 2 bedroom, 800 sq. ft. co-op’s in Jackson Heights stop selling for $250K (with an $800 monthly maintenance fee). Being close to the “E” and the “7″ train is great but, please give me a break!
John Rocker was 100% right with what he said about the 7 train. When I’m on that thing I feel like I just slipped into the bar scene in the original Star Wars. The houses you see from the 7 are dilapidated pieces of junk and they are supposed to be worth $500,000? Yeah, pull this leg and it will play Jingle Bells.
john rocker told the truth, and was crucified by machinery of political correctness that has been installed in society. The truth must not be told at any cost lest the politically correct be angered.
Al Sharpton can lie all he wants and will be supported by the same political correctness gestapo.
We’ll know we’re on our way out of the abyss when people can actually EXERCISE their First Ammendment rights, as today’s guardians of political correctness will be consigned to the dustbin of history.
Up yers, Katrina!! BAGHOLDER!!
All them peoples in them big fancy houses is the ones that is hurtin. Aint no one in an old singlewide trailer facin forclosure.
I bought my 1975 “Bubbas Dream” fer 1200 dollars cash in 1988 an never worried bout no mortgage payments since. Plus if ye gets in money truble you can scrap out the aluminun siding off the trailer to get by.
Cant do that wif a fancy brick house!
http://buckandmabelsbigadventure.blogspot.com/
LOL!
Wacahootaman!!!You’re genius!!!!!!LOL!!!!!!
Wacahootaman is a regular over at city-data (where bubble talk is starting to light up the forums) and is most definitely a genius.
I’m talkin’ book-deal genius. Seriously. This guy is f-u-n-n-y.
I think the NAACP will come after his ass tho!!
I know you’re kidding, but it’s worth pointing out anyway…my mom runs a title company in a VERY small town. Probably 60% of the sales she does are trailers…and guess what, people are overpaying for them and doing 100%+ financing just like anywhere (and anything) else. She recently saw a double-wide go for $125K with 100% financing. The couple’s (buyers) combined income was about $40K. She said she didn’t know how they were going to make their mortgage payments…and remember, the value does not go up on these manufactured homes. This is in middle of nowhere (1200-person town) in the Midwest.
“Sparks, who could not be reached for comment, bought his 1960s ranch-style home in March. He paid $1.32-million for the property, which last sold for $275,000 more than a decade ago.”
Sparks, it looks like we’ve found the greatest fool …and it’s you!
Florida is an expensive RE economic Dead Zone on a Sandbar Sandwich waiting for a major hurricane to DEVOR IT !
or waiting for the Greenland icesheet to melt even more.
I was back in New York State for the holidays and I went to my old dentists because the dentist I have in Florida said I needed $2k worth of dental work.
I forced my FL dentist to send my X-rays to my NY dentist; yup, no real problems, maybe one cavity. Oh wait, my NY dentist just checked my grill out: no cavities at all! Thanks Florida!
It gets better: my NY dentist says, “So, you’re livin’ in Florida?” I answer “yes” and he launches in to a tirade about how Florida sucks, he got some rash from a lake, sold his WPB house to “some sucker,” hates the traffic, no culture… you know the routine.
I am out of here as soon as I finish up what I came here to do.
Florida truly sucks, and I can no longer pretend I feel otherwise.
For those that havn’t read this…a must read on Fls’. fate.
http://xroads.virginia.edu/~hyper/Allen/ch11.html
Credit to :DC_too
Interesting reading. The top of that seems to be:
http://xroads.virginia.edu/~hyper/Allen/Cover.html
Okay, that really made me laugh. Funny stuff! Is your dentist in the City?
I didn’t realize you were pretending. LOL
My dentist is in Rochester, NY. My family has been going to him for 25 years. I had a dentist tell me the same thing when I lived in Tennessee and I did the same thing then, too. Getting a check-up, and gladly paying out of pocket, is becoming a holiday routine for me.
I am not sure if there is confusion in this thread, so let me be clear: nothing of what I wrote is an exaggeration. I really did have a dentist in Florida tell me I needed a crown and all sorts of fillings.
My New York dentist thinks that I have one tooth that may need filling in a year or so. That’s quite a difference.
The NY dentist really did go into an anti-Florida tirade. It was all very funny. And 100% true.
“It was a desperate attempt by a man who had hoped to flip the house for a quick profit. Now, several months later, the house remains unsold, and Sparks is facing foreclosure, said Richard Doyle, Spark’s real estate agent.”
“‘The market shift is creating hardships for many property owners,’ Doyle said.””
Really, the market shift is creating hardships for property owners?
Don’t you mean greedy “flippers” who didn’t give a damn about the hardship they were creating for legitimate buyers as the hoped to scalp them for some quick cash.
Let’s see. This guy thought the neighborhood was clearly undervalued and figured he could pick up a quick $400,000 from some unsuspecting fool. Not bad for a couple months house sitting.
Anybody here feel any sympathy for this guy??
“Anybody here feel any sympathy for this guy??”
Not Me. His get rich scheme fell apart. He took the risk and it didn’t work out.
No sympathy.
Any owner since 2003 can get out pain free still. So there really isn’t much of a demographic to feel sorry for.
Popcorn anyone?
Neil
I’m not so sure this wasn’t a fraud deal . The crooks find straw buyers and willing sellers to set the deal up .
Good point, you only hear about hardships sellers are facing in the “shifting market”. Where is the news coverage of buyers being priced out? Where are the sob stories of “I make 50% over the median salary and I can’t afford anything within 20 miles of here”?
Why is RE only about sellers, or about “mean, nasty buyers with lowball offers”. Nevermind the fact that you saw 5 lowballs in a row, your house is different and worth more, and the pristine, untainted MSM will cheerfully confirm it while helping you berate buyers.
The Magic Words to a House Sale
12:00 AM CST on Sunday, December 31, 2006
By ANN BRENOFF Los Angeles Times
Words matter. Wars have started over them. Civilizations have collapsed because of them. And it would appear that the speed with which a house sells might be determined by them.
As house sellers grapple for the slightest edge, the findings of several academics might offer some guidance.
For example, a Canadian professor, as part of a broader study on real estate sales patterns, found that homes where the seller was “motivated” actually took 15 percent longer to sell, while houses listed as “handyman specials” flew off the market in half the average time.
“It surprised even me,” said researcher Paul Anglin, who teaches real estate and housing trends at the University of Guelph in Ontario, Canada. The study dissected the wording of more than 20,000 Canadian home listings from 1997 to 2000.
What surprised him most was how the buying public put style over substance. Words that denoted curb appeal or general attractiveness helped a property sell faster than those that spoke of value and price.
Homes described as “beautiful” moved 15 percent faster and for 5 percent more in price than the benchmark. “Good-value” homes sold for 5 percent less than average.
Another finding in Mr. Anglin’s study was that the plea of “Must see!” was received about as enthusiastically as a dinnertime telemarketing call. Homes with listings using those words had a statistically insignificant impact on the number of days they took to sell.
Listings where the word “landscaping” was heralded sold 20 percent faster, and homes in “move-in condition” took 12 percent less time to sell than the benchmark.
Owners use listing language to convey how serious they are about selling, but some words work better than others, Mr. Anglin’s study found. Listings in which the seller said he was moving sold for 1 percent less in price compared with 8 percent less when the seller was “motivated.”
The real meaning
Real estate listings, not unlike personal ads, are crafted to minimize blemishes and maximize selling points. So if “enjoys moonlight walks on the beach and cooking together” means “I’m unemployed and am looking for someone who won’t always expect to eat out,” then “needs TLC” might mean “this house will have you on a first-name basis with the clerks at the local hardware store.”
Last year, the impact of listing language was covered in a National Bureau of Economic Research study that looked at whether real estate agents selling their own homes hold out for a higher price. (They do; the study found they take longer to sell but fetch a higher price.)
Descriptions of houses that indicated an obvious problem – such as “foreclosure,” “as-is” and “handyman special” – drew substantially lower sales prices.
One problem discovered was that “superficially positive” words that, in effect, damn with faint praise – such as “clean” or “quiet” – had zero or even a negative correlation with prices.
‘Golf,’ not ‘paint’
Those findings echo the ones in a 2000 paper called “Real Estate Agent Remarks: Help or Hype?” researched by University of Texas finance and real estate professor Ronald C. Rutherford.
Mr. Rutherford found, among other things, that buyers read between the lines. If you can’t find anything better to say than “new paint,” perhaps it’s best to say nothing at all.
Factually verifiable comments such as “golf” or “lake” drew increased sales prices; other presumably positive comments about new paint or carpet brought lower ones.
“What you say needs to be extravagant,” Mr. Rutherford said, “or the signal that is received by buyers is that it’s not worth talking about.”
But what do sellers know? “New paint” appeared on 15 percent of the listings and was the most commonly listed comment.
Mr. Rutherford said sellers would be best served by a listing with “just the facts, ma’am.”
“If it’s a good deal, you need to convey it with factually verifiable language.” An example: “Needs repairs,” he said.
Of the information from his study, conducted between 1994 and 1997 of almost 60,000 closed residential transactions in Tarrant County, what surprised him most?
That homes with “motivated” sellers stayed on the market 15 percent longer than average and sold for 4 percent less.
His theory: “They overpriced the house to start with and eventually had to lower it. That explains the length of time on the market and the lower sales price.”
Does he have any advice for today’s sellers?
“Yes,” he said, “avoid the word ‘motivated.’ ”
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“Descriptions of houses that indicated an obvious problem – such as “foreclosure,” “as-is” and “handyman special” – drew substantially lower sales prices.”
Gee, maybe they deserved a lower price to compensate for the condition?
“That homes with “motivated” sellers stayed on the market 15 percent longer than average and sold for 4 percent less.”
They were probaly overpriced to begin with, then became motivated as time went by, forceing them to take a low but available offer. It’s the old adage “Sell when you can, not when you have to”.
The idea that the words used in the listing adds effected the selling prices, to any great extent, is simplistic and absurb. There are many more variables at work. This from a professor? He should know better.
I see many listing that need total renovations, but have high prices that don’t compensate for the condition of the property, and the properties just sit.
Bravo, well said. There seem to be no controls whatsoever in that study.
“‘How is that affordable?’ he asks, anger rising in his voice.”
Should’ve had that epiphany BEFORE you bought the house, dumb ass.
I have seen RE agents advertise ceiling fans ,and make a big deal over cheap items . I have seen ads that touted the fact that the property had a fence .
I can beat that. The house next door to me has been for ssale over a year and empty a year and a half. Amenities? A ceiling fan and a fire detector.
I can see all the Ben Jones-hating NARites banding together to turn that empty property into a half-way house for recently-paroled cons, or some such thing.
I always laugh at the ubiquitous ‘ Crown moulding’. Why is that a selling point? It’s $1.20/ft. at home depot. Less than $100. for an avg. room. Is that supposed to increase a houses’ value by 30%
This post is a great lesson showing that they are NOT homeowners, they’re LOANOWNERS.
“In perhaps another sign of the times, Maruca won the prize by selling houses to his own family, one to his brother, one to his daughter and one to himself.”
————————-
Methinks this guy won’t be showing up to the family Christmas party next year, or many years to come.
HAHAHAHA!
But hey, he sure got a cool Lexus out of it. THANKS DAD!
A few years back one of my former neighbors bought his daughter a new Lexus for her 16th birthday. She was snotty little b***** who promptly proceeded to back into another car while trying to leave an underaged drinking party [she was less than stone cold sober at the time]. Her folks were furious, and took the car away from her. I made them an offer on it (it had less than 260 miles on it, and the damage was very minor and was flawlessly repaired for under $2K) and they sold it to me for thousands under the Bluebook value. The pure hatred in their daughter’s eyes every time she saw me driving HER car, and her middle-finger response to my cheery wave, are memories I shall always cherish.