In order for it to be a buyer's market the seller has to agree to sell.
I am working with a very nice couple, looking to buy their first home. We put offers in on, not one but, two properties this past week. (Not at the same time of course). Both offers were rejected.
The first home needed a lot of work, has been on the market for a year, on the 3rd listing agent and the seller would not work with our offer.
The second home, a little newer but, over priced. The sold comparables showed the same model home, same condition, same location, sold for 20K less than what the sellers are asking. We submitted our offer based on the comparables, but they just flat out rejected the offer.
Unfortunately in both cases the sellers are going to lose. I ran the stats for the area and YTD they are down, 38% units sold, down 12% average sale and down 13% median sale. In speaking to a local agent, the priced are definitely not going up.
I just don't get it. Confused in Naperville.
Your comments are appreciated.
Maria Mastrolonardo is a full time Illinois Realtor specializing in Short Sales, has been helping home-buyers and home-sellers since 1997. Can help you with any questions or information regarding Short Sales for the Western Suburbs of Chicago which includes but not limited to; Naperville, Aurora, Downers Grove, Lisle, Plainfield, Bolingbrook, Warrenville, Wheaton and Woodridge.
To reach me call/text at (630) 248-6077 or mmastrolonardo@gmail.com
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Unfortunately, these sellers are going to probably be praying for your buyers to come back in about 60-90 days, I'm betting. I'm finding that the problem with most sellers is that they are really not ABLE to accept much less than their asking prices, due to home equity loans etc. It is a buyers market---just have to find your buyers the right sellers, I guess!
Faith - You are right, and the fact is that both can afford to be more realistic. Thanks for your comment!
I feel your pain! I have a seller now with two offers waiting for him to respond. One is 3,000 below list price and the other is 5,000 below list price (neither are bad at all in this market). Big kicker is list price is 2,000 below comparables. This was done because according to the seller he "is motivated to sell". somewhere along the line his motivation disappeared b/c now he will not even respond to either offer and the more I encourage him to counter one of them, the angrier he becomes! Very frustrating. . I really don't think this one is going to sell b/c I do not think seller is motivated any longer. Would you release this listing under the circumstances???
Wendy - It's unfortunate sellers do not understand that value comes from what buyers are willing to pay. Wow...you have a hard one too.
There are still some unrealistic sellers in this market Maria. I went through the same thing a few weeks ago.
Mike - What they don't get is by being unrealistic, they are only hurting themselves. Thanks for your comment!
Sellers' Ego is what I call that. They let the ego get in the way of the reality. They know deep down but are hopeful despite the daily reports the market is down. Just like the mid nineties.
Patrick - That's right. Thanks for your comment!
Maria, the buyers determine the price based on the competition, and the sellers have to live in that reality. If there is too much to find that is better or equal for lower price the higher priced houses will sit. Sellers have the right not to give their houses away but they may have to wait more time to get their price.
Gary - Good points! Thanks for your comment!
The market is what is it is. Yesterday I had to tell a woman that her home was worth about $25K less than her husband was hoping list for. I hope it didn't burn a bridge, but I will not take an overpriced listing. I have one right now that I inherited from another realtor in our office, and I am still trying to get that seller down to the right spot.
I don't know if it is necessarily a buyer's market or seller's market here right now, at least for the starter homes midpriced homes. There have been a lot of homes moving quickly in these ranges lately - multiple offers and full price offers coming within days of listing IF the homes are priced right. For more expensive properties, it is a buyer's market.
Brenda - Great points! Thanks for your comment!
Maria- Certainly, the market determines the price, and the sellers have to live with it. However, it is not always the seller, who is unrealistic. I wrote a "Buyer's Market" blog, yesterday, from the other point of view.
There are some buyers who are convinced, they can buy a property for 30-50% of listing price, no matter how low that price has gone.
Just like unrealistic sellers will sit with their unsold homes, unrealistic buyers will miss some great purchase opportunities.
Marilyn - That I can understand, it's unfair to the seller trying to buy for 30-50% under list. But in our case, we just want to be where the comparables are.
I listened to a very interesting interview with Walter Sanford the other day. He offered a really good way of avoiding the problem described in the initial post: only work with sellers who have a high level of motivation to sell. The ones who don't have that motivation will end up acting like the sellers described in the initial post here. They're the folks least likely to "bite" on anything but a full price offer. I am not a real estate salesperson, but it sure seems like those folks take a good deal of time away from more rewarding endeavors. On the other hand, I imagine that those with a high level of motivation, usually resulting from a circumstantial need, are much more realistic in evaluating offers and responding to their agents' advice.
The bandwagon that a good deal of people seem to have jumped on is the short-sale. There's definitely a pressing need, and hence, motivation there..... but I can imagine that those are anything but pleasant transactions.
This comment would end up being much too long if I listed out every circumstance described in the interview as giving rise to "highly motivted sellers;" however, one that seemed rather fertile is divorce, the most obvious source of which is divorce lawyers. Somewhat less obvious is loan officers who work with divorce attorneys -- if the spouse who wants to stay can't buy out their ex because they don't qualify, the LO can always refer a salesperson. There are a few more in the interview.
If your favorite LO hasn't already given you a copy of the interview, feel free to get in touch and I'll get you a complementary copy. I listened to it and it sounded like some pretty neat stuff.
Best regards,
Juan - Thanks for sharing the information! You have some great points.
Maria: Some sellers just can not face reality. In a situation like this, it may be time to take your buyers to a bank owned property. Those are motivated sellers!
The sellers are not motivated, and their part time agent does not have the maturity to tell the sellers the truth. Easiest thing to do is say "NEXT!" They are not bargains, so there is not point fretting.
I hope their agents are telling them to wake up to reality. There are sellers out there that just are in a fog and think they are going to make huge money on their homes and that is not true. The comps are there for a reason. Good luck.
Chris - Exactly, I need to find them motivated sellers.
Jim - Next is right, I not going to have my clients overpay only because the sellers are not motivated.
LaNita - That's just it, I don't think the agents are doing their job. They are not motivated either.
G-R-E-E-D. It has become pervasive. When people realize that the journey is worth more than a few extra $$, they will understand that you were bringing them their next gift of life's journey, and they passed. Hang in there Maria!
Pete - You're right, unfortunately people do get greedy, but in the long run it ends up costing them.
Maria, we are seeing this as well in Southwestern Michigan. Alot of this confusion is coming from the mass media and their daily reporting on how everyone is taking huge losses. Also commercials are saying that people can get homes for pennies on the dollar.
Now granted, the repossessions are going for very low amounts, but they also tend to be either way out in a location that is not near anything or they are in horrid condition.
I do my business along and near Lake Michigan where prices have kept their own. Now that is not to say, they have not come down on the sellers asking price, because they should of. For to long sellers were fishing the market and now are understanding if they want to sell they need to get realistic. We do of course have the occasional Realtor who just wants a sign in the yard and will over price a listing, but after 6 months they will have an angry seller to answer to when they have no sale.
The biggest thing that has helped me is to educate the client regardless if they are a buyer or seller what the TRUE market is currently where we are at. What works in South Haven Michigan is different from what St. Joseph or Saugatuck & New Buffalo will take.
Try to educate the buyers on a specific area before you go out and see the homes, this will help them establish in their mind what price they believe they can come in at for an offer. Same needs to be done with the sellers, they need to know what the market is REALLY doing. I write a monthly market update column in our local press and I feel it is getting sellers the facts and figures they need to see from our stats to make a decision to keep or lower their prices of their properties. If not, they know that their competition will listen and thus get the buyer...
Ryan - You make a lot of good points. Thanks for your comment!
With all the hight LTV financing that was previously available you may want to consider asking the sellers to give you an idea how much equity they have in the property. You can justify it as part of preparing an estimated net at close for them which includes comissions propoerty tax etc.
With comperabes you can look at the likely sales price and determine whether the will be below water. If so you can be proactive about discussing short sale possibilities and determine whether the situation is a good investment of your time.
www.MortgageAdvisor.info
Just because their home is listed, doesn't mean they are serious sellers. They should not be listed if the pricing is not in tune with the market.
Greg and Jim - Thanks for your comments!