‘Trying To Break A Psychological Barrier’
The Wall Street Journal has this report on home pricing strategies. “Now that the market has grown uncertain, homeowners are at more of a loss when deciding what price tag to put on their property. Some sellers are experimenting with non-traditional strategies for setting prices.”
“When Eleanor and Simon Golledge put their Bradbury, Calif., home on the market in April. Instead of naming a price, the Golledges (who are selling the home without an agent) settled on an asking range. On a for-sale-by-owner Web site, they say they will ‘entertain offers’ from $1.198 million to $1.298 million.”
“It almost worked. The couple, who paid $770,000 for the house two years ago, has received three offers near or below the low end of the range. They accepted the highest, for $1.2 million, but it fell through on a seller’s contingency. They’re hoping for another offer that’s closer to their high number.”
“Two weeks ago, Rita and Daniel Davis put their three-bedroom Craftsman bungalow in Minneapolis on the market for $284,900. A week later, the price tag was $279,900. Cutting the price is common practice,- just not so quickly. The fast drop wasn’t due to unfamiliarity with the market. Before they listed their house, the couple had visited seven others for sale nearby. They discovered that many were similar to theirs, and worse, there was something for sale on every block.”
“By cutting their price within days, the couple hopes to send a message that they’re flexible. ‘We’re between a rock and a hard place,’ says Ms. Davis.”
“In February, Jonathan Hinkle put his five-bedroom home in Lansdowne, Va., on the market for $1.35 million. He purposely set it high and cut the number by $50,000 a few weeks later, and continued dropping it by $50,000 every few weeks until it reached $1.05 million. Mr. Hinkle, who bought the house two years ago, says that’s close to the lowest price at which he can afford to sell.”
“He says he didn’t get any serious shoppers until the price fell to $1.1 million. However, all were lured away by nearby builders, who recently began underwriting closing costs, buying down mortgage rates and giving away such things as $500 gasoline cards and three years’ worth of paid electric bills.”
“Cincinnati professor John Bryan tried to price his home carefully. He bought a new five-bedroom home in January. He finally set the price at $324,000. He received one contract, for $307,000, but that fell through. He has just lowered the price to $299,900, even though he may lose money on the deal after closing costs and commissions. (He bought at $250,000 in 1998 and added $56,000 in renovations.) He hopes the new price will bring his listing to the attention of a new group of Internet shoppers.”
“Mr. Bryan says he is disappointed that he had to drop the price so low, but he thought it was the best solution. ‘I’m trying to break a psychological barrier,’ he says.”
‘The couple, who paid $770,000 for the house two years ago, has received three offers near or below the low end of the range. They accepted the highest, for $1.2 million, but it fell through on a seller’s contingency. (The Golledges had a clause in the contract that they needed to find a home they wanted to buy within a certain time period. They didn’t.)’
That delay may have been a mistake. A $400k profit in two years and they let it go?
Greed is a powerful emotion and costs people lots of money.
Yeah, they should have extended the contingency for another couple of months. But I wouldn’t be surprised if the buyer just used the contingency to walk away.
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yeah - something smells fishy here. I bet there’s more to the story and the BUYER actually walked away.
I agree with Gekko — the sellers easily could have rented a place, in order to nail down the profit. I’d bet, too, that the buyers walked.
Greed is good, unless it costs you a $400K profit in two years…
As a future buyer (once the correction REALLY happens) I have this to say to the sellers;
I don’t care what you can AFFORD to sell your house at. I will pay the fair value, which is probably 30% to 60% below what you think it’s worth.
But this IS why you won’t be buying from an individual. They CAN’T lower their price. You’ll have to wait for the REOs.
I figure a lot of the specuvestors will look to dump their property once they realize that they are only going to keep bleeding cash and losing money.
You are assuming that the specuvestors will be able to this. Many, if not most, will not; because they are leveraged to the eyebrows.
One nuance which I am only now starting to see discussed is the strategy for pricing rentals when the FBs decide to try to go that route when they can’t sell at their delusional prices. Clearly, they believe that this correction is only temporary and Plan B will be to have some idiot pay their mortgage for awhile and then sell in a year or two at the fantasy price. What can I say, that’s a moronic way to think but obviously that’s what they do.
What gets me is that the same philosophy is carried through into the rental process. They clearly ignore market prices and try to “test the market” by asking ridiculously high rents based on the same fallacious crap - that “my place is so beautiful, I have so much invested in it, it’s a great neighborhood, etc.” - conveniently ignoring the empiric evidence all aroudn them that they will not get what they want. I even see unbelieveable demands of tenants like making the house available for showing (keeping it for sale while the renter is in there), no pets, no smoking, I even saw one that said “no partiers!” - all of this while asking full market price or even more! Oh, and they demand first and last month rent plus a month’s rent worth of deposit, PLUS a pet deposit, plus a credit report and your financial life history. Of course, you’ll never see any of this deposit money back unless you fight like hell.
It really is incredible. I saw one place in Dallas where the owner is trying to rent out an admittedly very nice place at 20-25% over market for a year while they are in Europe. Oh, and here’s the kicker. They want to leave the place with all the furniture in it and have someone pay a furniture deposit which of course they will keep if they find a tiny scratch on anything. Basically, they are asking someone to pay them over market rent to house sit the place. It’s been advertised for weeks and today, they say, MUST RENT BY JULY 9. Nice touch, to add the desperation element while making unreasonable demands.
You gotta love the square homeowner mindset trying to fit into the round landlord hole.
If you were in this position, wouldn’t you ask yourself the following question.
With the recent boom of anybody with even a pulse a few times a day being able to get an interest only negative amortization zero down no doc loan, What kind of people are left in the renting pool?
Well there’s people like me. Mid 7-digit assets but a renter. I cover my landlord’s property taxes and HOA fees. Barely.
What kind of people are left in the renting pool?
Those of us smart enough to stay the hell out of the housing market these days.
the cream of the crap. sorry, I just love that phrase. these are not the kind of prospect to build a successful business plan around.
‘They clearly ignore market prices and try to “test the market” by asking ridiculously high rents based on the same fallacious crap - that “my place is so beautiful, I have so much invested in it, it’s a great neighborhood, etc.” - conveniently ignoring the empiric evidence all around them that they will not get what they want.’
My theory about deciding on a rental offer: “I need $X,XXX.XX per month to cover my PITI.”
“Basically, they are asking someone to pay them over market rent to house sit the place. It’s been advertised for weeks and today, they say, MUST RENT BY JULY 9. Nice touch, to add the desperation element while making unreasonable demands.”
So true. I see the same BS around here. Also situations such as the one I posted the other day, in which an FB was trying to rent out a spare bedroom in their condo for $1550/MONTH. The owners that you mention in Dallas should consider themselves lucky if they can get 1/2 of market rent from a housesitter, and the furniture be d&%ed.
Some people’s arrogance and sense of entitlement just make me crazy. Who would want to live in a house full of someone else’s furniture and not get paid for it? Do they have to wear the owner’s clothes as well? Walk their dogs and move their lawn?
Feed their squirrels?
Txchick, you must know about my landlord then, even though we’re in VA. It’s exactly as you describe. We’ve owned for 10 years and have never rented, so were a bit naive on picking landlords. We’re 1-2 days from being out of there, thank goodness, and I won’t have to hear him whinging about how he’s doing us such a huge favor since our rent doesn’t even cover his mortgage payment. Also, he’s now stuck with 2 empty houses as they’re drastically overpriced with the competition, and more McMansion rentals are appearing in droves (it’s quite amazing). He’s trying to keep some of our security deposit - which comes as NO surprise - and he did ask for 2 months’ advance rent up front. (The power was out at the house and I couldn’t vaccuum yesterday, so he used that as an excuse to tell us he’d hire a cleaning company and take it out of the deposit.) The house is *immaculate* otherwise, except for the chronic leak in the basement. LOL. I am so going to enjoy watching that house sit on the market.
Mr. Hinkle, who bought the house two years ago, says that’s close to the lowest price at which he can afford to sell.”
What does “he can afford to sell” exactly mean??? Will he be able to afford the mortgage payment when his ARM loan adjusts? This is just idiotic.
You guys need to come to Ashburn and Leesburg area in Northern Virginia. Here you have 450K paper townhouses and 700k+ paper McMansions while there are vast amounts of land wherever you look. Who is paying that amount of money for such junk is beyond me.
Whenevery you see that, it means the equity has been “liberated” and there are at least two liens on the place.
In extreme cases, the liberated equity has made its way into “investment” properties which are also underwater. These are the really funny ones - the ones we’ll be seeing on 20/20 in a year or two and later, on Jerry Springer.
Now dats some funny sh+t!! LMAO
“liberated equity” LOL!
Yep, every time I see that phrase I know the true meaning is “HELOC’d up their ass!”
BayQT~
The equity has been “liberated” and the owner has been put into financial “bondage”.
Take to ambien and call me in the morning. (smile)
Hey Saratoga — are you from Saratoga CA or some other Saratoga?
“Value range pricing” is disgusting. It’s equivalent to the old “bait and switch”. Most sellers want the higher end, they use the low end to get you to come in and look (and “start a discussion” in realtors’ parlance).
I’ve seen a house listed for $415,000 – $470,000 on the local MLS. On the realtor’s own web site, it is listed for $459,000. What price do you think they are working to get?
Also, in this market, when a seller will “entertain offers”, this does not signal reality.
I suppose people are lucky that it is against the law to hock your internal organs for cash….
Because if they could we may see people with missing eys, lungs, kidneys, etc, when they can’t make the repayment on the liberated mony they received for their internal organs. DOUGH!
Jonathan Hinkle is full of crap. He paid $702,000 in April, 2004. He can “afford” to go lower than a million bucks. What a greedy bastard.
Either a greedy bastard or a stupid fool who cashed out $240k or so worth of equity and really can’t afford to go lower then $1M.
That’s almost certainly what is implied. He’s a classic FB and soon to belong to a distinguished group: Those that consitute the staticstics in the BK & foreclosure spreadsheets and the 2007 headline news stories…
I think he is smart. How else can he get $240K to
spend and enjoy life? All he has to do now is walk away,
leaving the house to the bank. Bad credit? No problem, blame it on the housing bubble, everyone will understand.
As these people try to “hold out” for the price they feel they deserve, the price they will actually receive continues to decline. The downward trend in housing is becoming much more apparent in mainstream media headlines…people are catching on, especially potential buyers.
Way to go! I love it when these FB’s get busted.
Sorry, Mr. Hinkle in fact you can always go lower, the only question is whether you will book a profit or a loss on the sale.
“Mr. Bryan says he is disappointed that he had to drop the price so low, but he thought it was the best solution. ‘I’m trying to break a psychological barrier,’ he says.”
As the overheated housing markets continue to get pounded by a new reality the “psychological barrier” that will be broken will be that of sellers, not potential buyers.
Just got back from a day in Bakersfield to find this in this mornings Salinas Californian newspaper:
Salinas facing exodus
City officials dispute numbers, but concede costs discourage many
By ZACHARY STAHL
The Salinas Californian
A decade ago, Mark Scarr said, his moving company had 10 families coming into the Salinas area for every five going out.
Now, the opposite is true, said Scarr, president of Scarr Moving and Storage.
“People are cashing out here and going up to Oregon, Idaho and Washington,” he said.
link
Strange… the story didn’t mention White flight (from La Raza) at all. But those destinations help tell the story: Oregon, Idaho & Washington.
“Cincinnati professor John Bryan tried to price his home carefully. He bought a new five-bedroom home in January. He finally set the price at $324,000. He received one contract, for $307,000, but that fell through. He has just lowered the price to $299,900, even though he may lose money on the deal after closing costs and commissions. (He bought at $250,000 in 1998 and added $56,000 in renovations.)”
This paragraph is written backwards or inside-out or something. After reading it three times, I think he bought a house in 1998 and is trying to sell it, but he’s already bought the 5-bedroom house as well.
Not F’d yet, but soon?
Yes, sounds like they should point out he is trying to sell his existing house. He can’t get the price he wants for the house he bought in ‘98. Once he gets over this hurdle, he will get to experience the double-digit % declines on the more expensive house.
It’s really much worse. Right now he’s riding both of these properties down while heavily leveraged. Leverage is a bitch when the market goes the wrong way on you…
Also, notice this regarding the numbers:
250k (original purchase) + 56k (renovations) = 306k. Now, add on anticipated 6% commisions fee and we get…about 324k.
Looks like it was initially priced to break even. Now, after his price reductions, isn’t it a little bit odd to say that he “may lose money” on the sale?.
Then again, I suppose a magical bidding war could erupt befor his very eyes.
I had a discussion with a realtor at our local dog park last night…and let me say I was appalled at her lack of ethics.
She seemed nice enough. She had lots of dogs she rescued and was friendly. Then she started talking young couple near us. They got on the topic of real estate and I could not believe what she said “you can buy a condo by traffic circle for $499,000 and then when IT GOES UP you can sell and move into your dream home. No one gets their dream home right off the bat except if you are rich”.
I could not believe she just ASSUMED prices would go UP. I thought “I have to talk to them and tell them what I think”. So I pulled the gal aside and told her every single day I read about a housing bubble…how all indicators say that prices will go down. I told them to WAIT….for years if necessary to get a good price.
I just couldn’t believe this woman. She then told us of the “great rental values” she has seen….one is in a “working class” neighborhood. Yeah right. The neighborhood she is talking about is crime ridden…certainly no place for a single woman like myself. Of course, SHE lives in the desirable part of town. I wonder if she would think of living in the “working class” area she tells everyone else to live inl.
Amazing.
Sounds similar to what an agent told me just a few weeks ago. She told me I need to get my foot in the door on at least a condo *right now* since prices have subsided a bit. Then in 6-8 months I can sell it for a $50K profit and move into a bigger home.
If I hadn’t been reading this blog I may have almost been tempted by her “expert” advice. So many of these people (RE agents) are the worst type of salespeople….or should I say the *best* type, seeing how persuasive they can be.
Needless to say I don’t talk to that agent anymore.
OK, bubble has burst. It’s official.
In a bakery today in Springfield, MO, while eating lunch, we somehow started chatting with the young waiter about house prices. We mentioned we had moved here from CA and I said I was renting right now. This 20 yr old kid said — “you’d better buy NOW because prices will only go up and you’ll get priced out of the market!” By the way, I think the median price in Springfield is $110K.
This is the equivalent of the taxi driver recommending pets.com IMHO.
Many of these people are going to learn the lesson ” Sell when you can, not when you have to”.
So glad I sold in Jan of ‘05! The market was red hot and I knew the house would be a tough sell in even “normal” times.
We will probably rent until about 2009. Since we’re on the coast, we may rent forever.I wouldn’t want to have my equity, or more, wiped out by a hurricane.
“Cincinnati professor John Bryan tried to price his home carefully. He bought a new five-bedroom home in January. He finally set the price at $324,000. He received one contract, for $307,000, but that fell through. He has just lowered the price to $299,900, even though he may lose money on the deal after closing costs and commissions. (He bought at $250,000 in 1998 and added $56,000 in renovations.) He hopes the new price will bring his listing to the attention of a new group of Internet shoppers.”
“Mr. Bryan says he is disappointed that he had to drop the price so low, but he thought it was the best solution. ‘I’m trying to break a psychological barrier,’ he says.”
Sounds like the psychological barrier he needs break concerns his denial of economic reality. The fact that he bought for $250K and added in $56K in renovations does not imply his home has a current market value of $306K (or $299,900, for that matter). It is a basic fact of life that, barring mania levels of housing price inflation, it is generally not possible to fully recover the cost of home improvement measures. It is time for Professor Bryan to move on from the denial stage to the bargaining stage of the grieving process, and lower his price to a level the market will bear.
Nice Kubler-Ross reference. I actually can’t wait to see the anger stage - should be entertaining.
I find the anger stage frightening. I have already experienced a number of instances of flipper road rage around SD…
You think we’ll see flipper suicides increase?
I wonder if anyone is keeping the stats on that, like “flipper suicides are up 10% YOY, a record high over the last 5 years”.
$56K in renovations does not imply his home has a current market value of $306K
I agree - since when does $56k in granite counter tops, paint, and fake laminate flooring increase the value of the house any?? I think someone has been watching too many episodes of “Flip This House”.
I think this says a lot about what appears to be a non-bubble area (Cincinnati.) He bought it in 1999 and put 20% extra upgrades into it. Now he can’t even get his costs back. Many of us on the West and East Coasts would be thrilles to buys a house at 1999 prices plus 20%. Except for buying a new house before selling the old one I don’t see this guy as a greedy flipper. Just someone who needed or wanted to move up after seven years.
Greedy flipper, no. Unrealistically optimistic, yes.
HIstorically, himeowners were advised that renovations were almost always a money-losing proposition. You might be able to revoer 90% or more of the cost of landscaping, provided it’s done well and professionally. A kitchen remodel could recover 80% or so. You might also recover most of the costs of a bathroom remodel or add on. But the only reasons to renovate were because you planned on living in the home a long time and wanted to enjoy the updates or because you needed to keep up with the Joneses in order to sell.
The ‘Flip that House’ mentality is a whole new paradigm, particularly in the midwest. I think it will hold up about as well as the 300X internet stock P/E ratios did.
I disagree with you. Renovations can bring hefty profits if you know what you’re doing. I say this because I just renovated and sold my own house. I got $325 per square foot which is almost unheard of in my neighborhood. How? By using quality materials, doing the work myself, finding the right buyer, and finally, an appraiser who recognized the quality. End of story.
Same as it ever was. My folks bought their Connecticut house for $250,000 in ‘81. Put it on the market for in “89 (at the end of THAT boom) for $650,000. It finally sold in ‘92 for $375,000 (after torturous lagging price reductions). Funny thing was that in the end, they got probably should be considered “fair” appreciation: 50% over 11 years.
Factoring in the rate of inflation that occurred between 81 and 92? My checking accounts gave a greater rate of return in that period.
My conclusion from the article is that “home pricing strategies” don’t work.
Thats not really accurate. What you might have said is that current pricing strategies don’t really work. I bet there is a “strategy” ie price point at which any house can sell.
Nope. You really, really need to hire that family of actors so they can show potential buyers what their Baywatch lives will be like!
Sellers have become spoiled from the last few years. But the last few years are not reality. In normal markets sellers cannot “entertain” offers at their whim. Houses are not typically “easy” to sell, with multiple offers in days, etc.
As we return to a more normal market, many of these people are going to have their “trees” shaken. Hard.
Interesting times we live in…lol. Watching a bubble deflate is a wonderous thing.
I have a really interesting story for all of you that fits right in. I heard it from a friend last week who works for a telecom company in the Dallas area.
He is a regional customer relations manager who went out to speak to a customer who had continually complained about poor service, thus, they had not been paying their bill (which was very high). It turns out that they lived in an area of $1.? Million dollar homes. Their place was absolutely beautiful. But when he walked inside, he noticed that there was almost no furniture. (well, well, well…can we say trying to put on the Ritz) So they discussed the “problem”, he then wondered if the neighbors also had issues. He switched the lines and talked to the neighbors…neighbors had had NO problems with their service, and with the switch there was no change in the next door neighbor’s service, but they confided in him that the other folks were always complaining about something. He goes back over to the complaining customer’s home, and there he met up with the cable guy. They talked a bit, cable guy asked what was wrong (my friend couldn’t/wouldn’t tell him what was happening), but cable guy mentioned that these people had not paid their bill and were complaining of some kind of imaginary problem. Per protocol, he had to come out, of course. VERY interesting!
To make a long story short, anyone could see that these people were way over their heads, couldn’t afford this house, but were buying time by blaming the services companies or anyone they could to stall for as long as they could to not pay their bills. Is this crazy or what? And how many more people like them are out there trying to *be* the Joneses, not just try to keep up with them?
BayQT~
I have a really interesting story for all of you that fits right in.
We’ll decide if it’s “really interesting,” thank you very much. Just start with “I have a story.”
Sounds like these people are stalling, probably in hopes that real estate appreciation will come back and bail them out. Fat chance of that, they will keep the game going until they just explode in a festering ball of debt.
I thought it was a good story…
So did I. My point is, the reader decides what’s interesting, not the writer.
Damn, Sammy, what side of the bed did you wake up on?
When I heard it I thought it was interesting…sheesh.
BayQT~
I wouldn’t bust on you if I wasn’t fond of you, BayQT.
Chill out Sambone.
Awww…thank you, Sammy. I feel better now.
BayQT~
So did I - stories like that are the fun of reading here.
I encountered this kind of stuff when I was visiting friends and doing the party circuit in L.A. last year. Lots of crappy beat-up 70s era furniture in the million dollar starter homes. One person had a broken A/C which they apparently couldn’t afford to get repaired (they had decided to buy a repair manual instead). I saw places with next to no furniture, no books, no phone service (cell phone only households), outdated and broken appliances, unattended or withered landscaping (I’m guessing maybe they couldn’t afford the water bill or lawnomower), no food or drinks in the refrigerator, etc. Of course, many of these people had the requisite boob jobs and Escalades so as to appear sufficiently successful and desirable to all of the other pre-movie-star/bigshot directors. BTW, these were people in their 20s to 50s, not college kids.
That is an interesting perspective.
We may see alot more of that kind of thing happenning in the future.
I wonder how much of that kind of thing was taking place in the late 1920’s, as thier bubble was beginning to deflate.
it was in I think the early 80s when the farm bust occurred, family farms were going broke all over due to low commodity prices, high land and equipment prices, high interest rates. Willie Nelson was doing FarmAid benefit concerts. The newspapers were full of stories about the human tragedies, with lurid details of suicide, families losing farms and going to the big city to rent a small apartment and get unskilled labor jobs. It was heart-rending to read them. The new version will be RE tycoons who went bust.
Please don’t compare distressed farmers to RE tycoons. Farmers are the salt of the earth. RE tycoons are the scum of the earth.
Sammy, I think Brad’s point was that occasionally a “perfect storm” comes along and wipes a group or asset class out. Farmers were hurt by the convergence of falling wholesale prices of crops, high interest rates on their machinery and operating money, etc.
This time a different asset will be clobbered, and that will be real estate. Too many investors are extremely overleveraged using variable rate debt, and this variable rate debt service is going up sharply. Affordability is down to as low as 1.9% (Los Angeles area, Wells Fargo Opportunity Index, thanks Deb). Sales have fallen off sharply. We have that convergence in the real estate asset class. Too many people leaning all in one direction.
Bag holders are stuck, as in reality real estate is proving how sometimes it is not a liquid investment. Markets are cruel when they turn against you, and do not care about families, retired people, disabled people, farmers, etc.
The stage is set…let the play begin!
(and Sammy, you really should take a pill or something)
Some farmers are…the old fashioned ones. The new modern factory farming use as many chemicals as possible for profit are not the “salt of the earth”. But I hear what you are saying….both of these types do harder, more meaningful work than the “Realtor”.
Did any of you ever see ths when it came out a few years ago?
http://www.pbs.org/wgbh/amex/trouble/
It made my husband all teary eyed. He grew up on a farm in Nebraska.
Where do you think they get their chemicals from…the chemical fairy? That stuff is expensive. Farmers use as little of it as they possibly can.
The bigger farms are actually better with the chemicals than the small ones, as they are a bigger litigation target. They can also afford to do research into ways to reduce chemical usage (cost).
Farmers don’t want to poison people any more that hippies want to force everybody to live in yurts and subsist on bean sprouts.
Please don’t ever lump farmers with RE tycoons. Farmers and their families do backbreaking work and face a constant juggling act just to eke out a modest living, in most cases. They’re the salt of the earth. RE tycoons are the scum of the earth. Die, yuppie scum!
A Bend, Oregon report:
I have a friend over there and she called me this morning, and has decided to put her house on the market. She’s very observant and mostly realistic about what’s happening. She is willing to listen to my perspective to an extent, and is clearly more alert than most.
She says the for sale signs are everywhere, the specs are bailing, a lot of people are now running scared. She indicated the the older earlier in the year comps for her high end property are about 825k, but she is listing for 795K, and is probably motivated to go lower. She freely admits the top was last summer, and feels too many sellers are trying to get those prices now, so is trying to undercut them and get lucky. This psychology is interesting because she’s sort of a combination of an alert individual and the nesting type (as long as prices are stable or rising). So here we have an example of someone (alert) attempting to “break from the overpricing pack.” Her experience will be a good canary in the mine shaft.
Russ,
Always enjoy your comments. About your friend, she’s priced about 3% below last year’s high. In determining the appropriate price, she might want to consider 1) How many houses were bought by speculators (ie. how much of the run-up was false demand), 2) How much real equity does she have (ie is the mortgage 400k and she’s asking 800k or is the mortgage 750k) and 3) How much does she need/want to sell.
If she really want to sell, and there’s real demand in Bend, she should probably price it 5-10% BELOW the last sale. As interest rates continue to move up, selling will become more difficult. 800k is a lot of money; under traditional guidelines it would require an annual income of 250k +. That’s a lot of money, even in the Bay Area.
All this has been discussed more thoroughly and more elegantly elsewhere by others. But price to sell, not to wish.
Good luck to your friend
“She indicated the the older earlier in the year comps for her high end property are about 825k, but she is listing for 795K, and is probably motivated to go lower.”
How is a buyer supposed to guess that she’s motivated? Assuming she has equity, she should list it at less, say 725, and then if there is no interest in the property, 699.
At the lower price, she can demand a good buyer who has good credit and a substantial down payment, which a lender is unlikely to refuse. And no contingencies! Just my 2 cents.
Dare I ask? She put it on the market with a Full-Service realtor at 6% commission, or is going discount? I find the people who claim to be the most astute, tend to think they can do it by themselves, and skip the realtor. In this market, I would pay the full 6% and make my price the lowest per sq ft in that zip code
When the dot.com/NASDAQ bust happened, there were probably quite a few people who told their broker; “I can’t afford to sell my stock at that price”. Especially if they bought on margin. You know what, the market didn’t care then and it doesn’t care now.
Anybody else hit by the fact that in many areas house prices have gone up 50-100% in the last 4 years.
But, when it time to sell the owners think they’re ’sacrificing’ by cutting their unrealistic and inflated asking price by, oh, say 2% to 3%!
and bitching about negative media coverage, when they sure as hell didn’t mind media coverage that drove the prices up and caused the stupid to make rash financial decisions.
It is rather comical, isn’t it?
got a question…what happens to a home buyer when the bank forecloses on the property?
Maybe we (on blogs like these) are the big suckers. If I could have used a 1-year ARM..and bought a very nice house with no money down..and stay there for 2 years say and then walk away…I get all the tax savings and take NONE of the risk.
Also, since I didn’t put any money down..I would have no capital at risk. Also, if during those two years I maxed out my 401K…the banks can’t go after that.
So..the ONLY big deal is that I get a negative on my credit report. But America works on Credit…and because the market for loans is so competitive.somebody will give you a good rate.
Case in point..the sub prime market was SOO competitive over the last few year.
I am being to feel like I’m the sucker.
Or maybe a troll, atrain?
“So..the ONLY big deal is that I get a negative on my credit report.”
Which has an impact on more than your ability to get credit in the future. It will affect your future job prospects, your ability to rent, your auto and other insurance rates. Credit reports are used in all those areas. Case in point: I have a niece who went bankrupt. She had a hard time finding a decent job after that, because she was competing against equally qualified candidates who _didn’t_ have that mark on their record. Finally one of my sisters took pity on her and arranged to have her hired where she worked in HR. The only good thing that came out of that niece’s bankruptcy was the fact that she and her husband simply couldn’t qualify for a decent mortgage during this housing bubble, so they remained renters - and in the long run, that will have saved their butts.
“So..the ONLY big deal is that I get a negative on my credit report. But America works on Credit…and because the market for loans is so competitive.somebody will give you a good rate.”
You’re about 23 years old, right?
I spoke with a realtor in Rochester, NY this morning about a relocation. She told me ‘last years sellers market is gone, it is a total buyers market. This is being said about a place which didn’t really have a bubble.
Rochester??!!! Wow, that is interesting. If it’s a seller’s market in the non-bubble areas, what does that indicate will happen around the country????
Hey, Ben, don’t be too quick to peg A-train. There’s at least a bit of unfortunate truth behind his “modest proposal”.
I’m guessing most voters will be hit hard in ‘07 and ‘08 - if not directly as a FB, then through their RE-loaded 401Ks. If they take their enraged sense of entitlement-violated to the polls, who knows who’ll wind up the sucker?
no I am not a realtor….and I do think there is a massive world wide credit bubble (the result of which is a over heated real estate market) which is going to crash at some point (looking like its on way down). And I rent because I don’t want to overpay for a home that will devalue in money.
Having said that..there will be a lot of people effected by foreclosures..and I refuse to believe employers will turn away good employees with solid skill sets just because they foreclosed on their homes (their excuse can be we were told one thing on the mortgage and signed something else…blah blah blah).
in any case..I did some research on foreclosures…and apparently the difference in what you owe vs. what your home sold you are still responsible for and the bank can garnish your wages.
So..while I think the negative credit report is total BS…if you financed your home 100% and sold it for less that you paid…than I can see why you would get screwed.
Remember “layaway”? Years ago credit was not available to everyone, and when that “massive world wide credit bubble” bursts it won’t be available to everyone again.
won’t the IRS tax you for debt forgiveness of hundreds of thousands of dollars? I haven’t seen the new BK laws, but you can’t just walk away anymore, they will just take it out of your future wages, at least a part of it.