Everyday….I mean everyday. I pause and sit at the virtual footstool to read Lenn Harley’s wisdom. It is not something she pulled out of a cracker jack box. Lenn has been in the trenches since before most of you got into this business. She remains wise enough to know she doesn’t know everything and cautious enough to check her facts before sharing.
This is a very accurate portrayal of the market.
Kudo’s to the Grande Dame of Real Estate for sharing.
IRRESISTIBLE FORCES ARE MEETING IMMOVABLE OBJECTS!. . . . WE ARE TRULY LIVING IN A PARALLEL UNIVERSE WITH SELLERS ON ONE SIDE OF THE CURVE AND BUYERS ON THE OTHER! Can they come together and form “WHITE MATTER”. Or, will be all be drawn into that BLACK HOLE of negativity.
Why, what do you mean, Lenn???
What “irresistible forces”? What “immovable objects?”
NO. 1 IRRESTIBLE FORCE: SELLERS’ LENDERS WHICH, AFTER 3 YEARS OF SERIOUS and UBIQUITOUS SHORT SALE ACTIVITY, THERE ARE:
- No Short Sale Guidelines for the lending industry.
- No lenders with established published Short Sale processing procedures.
- No conformity of qualifications for Owner acceptance for Short Sale.
THE IMMOVABLE OBJECT? THE LENDER and THE INTRACTABILITY OF SHORT SALE PROCESSING by sellers’ lenders who follow no logical or timely attempts to get to the closing table. Oh sure, we read “bragging rights” advertising and blogs (advertising) by listing agent describing “closed in 19 days” or “processed in 45 days”. Yet, the preponderance of short sales that the Buyers’ Brokers in my network close have been taking an average of about 135 days. That’s not fiction. That’s fact established by tracking the “contract to close” period for 12 months – 73 short sale transactions by 11 experienced Realtors.
NO. 2 IRRESISTIBLE FORCE: PROSPECTIVE HOME BUYERS WHO BELIEVE THAT ALL SELLERS ARE DESPERATE TO SELL AND WILL ACCEPT OR NEGOTIATE ANY LOW OFFER INCLUDING:
- Bank owned properties that are discounted to about 90% of local market.
- Short Sale listings with 8 DOM that are discounted to about 90-95% of local market.
- Non-foreclosure or non-short sale listings that are priced to sell at the low end of local market.
- Fixer-upper listings that are discounted to 25% below market. THE IMMOVABLE OBJECT? THE INTRACTABILITY OF
BUYERS WHO BELIEVE THE NEWS REPORTS THAT ALL OWNERS ARE DESPERATE TO SELL AND ANY OFFER IS REASONABLE. One of the results of the frequency of low offers is that sellers are pricing unrealistically high to counter the low offers that they expect from unrealistic buyers. The belief that buyers can “pick up” real estate at prices well below the local market may be inspired by Realtor advertising touting their “negotiating skills” which often amount to little more than writing low offers. Without good research into the individual property listings with consideration of recent closed sales, general condition, local attractions, shopping, schools, transportation alternatives, etc., simply writing low offers doesn’t take an experienced real estate buyer’s agent. Such superficial representation can be performed by any licensee.
NO 3 IRRESISTIBLE FORCE: HOME OWNER SELLERS WHO BELIEVE THAT THEY CAN DICTATE THE CONDITIONS FOR THE SALE OF THEIR HOME.
- Sellers who eschew agent prepared CMAs and price their property based on how much they want to clear.
- Price their home based on the price for which a home in the neighborhood sold 11 months ago.
- Owners who refuse to address deferred maintenance items prior to listing.
- Owners who ignore agent provided sold pricing trends and expect the market to always go up.
- Owners who believe that “as is” means that a buyer must accept the property “as is”.
THE IMMOVABLE OBJECT? THE PROPERTY. A piece of land with or without an improvement that has no heart or brain. A property that listens to no one. A house that refuses to morph into what the seller wants to believe he is selling and refuses to be reduced to the image of what the buyer believes is it’s value.
THE REAL ESTATE INDUSTRY IS ON THE PRECIPICE OF DRAMATIC CHANGE. Much has already changed in the past 3-4 years.
- Home values have plummeted across the country.
- Foreclosures and Short Sales dominate many local real estate markets.
- Mortgage loan qualifications have become dramatically more difficult.
- Negative equity has stripped many home owners of their financial security.
- Loss of credit limits the ability of buyers and sellers to buy and sell real estate.
- Unemployment excludes many from the real estate market for some time.
- The high percentage of First Time Home Buyers with marginal credit and no cash reserves.
IS THERE ANY GOOD NEWS?? Of course there is. There always is:
- Home buyers have many new and late model homes on the market from which to select their dream home.
- Home prices should, in time, show positive equity for today’s buyers.
- Mortgage payments are low when compared to past values.
- Interest rates are low which should benefit owners for many years to come.
- New homes have been reduced in priced to about 3/4 of the 2006 price range.
IS THIS A GOOD TIME TO BUY A HOME? Clearly, if a person is financially able and motivated towards home ownership, this is an a good time to buy a home.
IS THIS A GOOD TIME TO SELL A HOME? If an owner is realistic about the local market values and has sufficient equity or assets to close. Other than need, it’s not a good time to sell. However, the picture doesn’t appear to be changing any time soon.
IS THIS A GOOD TIME TO JOIN THE REAL ESTATE INDUSTRY AS AN AGENT? Only if a person has sufficient savings and/or income from other sources to be able to finance a real estate practice start-up and pay living expenses for probably a year or more. It may take that long to build an income stream from real estate sales. Many home buyers believe that they can do the job themselves with the help of the Internet. Many agents don’t understand Internet advertising.
DON’T FORGET TO REBLOG! THANKS.
Courtesy, Lenn Harley, Broker, Homefinders.com