Wednesday, February 18, 2009
Saturday, February 7, 2009
If Yogi Berra had a shot at this, he'd say, "Ya know, 90% of a recession is half mental!" Now the truth is that our current situation is a cocktail of Wall Street Greed, Banking Ineptitude, Consumer Foolishness, Global Economic Confusion, and good old fashioned Fear, fueled by the media's incessant need to print garbage... all shaken, not stirred. That having been said, it's a mess and we need to consciously work our way out of it.
I've been a Real Estate Broker for the past 22 years and I've seen some ups and downs. Prior to that, as a career Army Officer and a housing consumer, I once was the proud owner of a 16.75% Veteran's mortgage in 1981, near my job at the Pentagon. And that wasn't half bad, considering they had topped off at over 20%! Makes today's rate of 5% seem pretty good, hmmm?
If you are a buyer today, prices are low, rates are low, and inventory is abundant. And you are operating from a position of vengeance... getting back at the way sellers treated you from 1995 to 2005. Most, however, are being fooled by the saturation of so-called "short sale" listings, most of which are presented at unrealistic prices. These are predominately nightmare transactions and not for the timid. It's a chaotic market, comprised of angry, emotional sellers, ill-advised agents, and uncooperative banks. It often seems that the bank's strategy is to run in circles, hoping for some magic "bailout money" to save the day. Shame on them - They were the ones just 2-3 years ago, giving 120% ARM financing, at 3% initial interest, on $500,000 homes... to people making $30,000 a year! About 75% of current Flagler County MLS listings under $200,000 are "short sales." The bad news is that they play havoc with "real" market pricing and nationally, fewer than 10% ever close.
So now you are a seller in this chaotic quagmire. What to do? Here are some thoughts, based on a great deal of "hands on"experience:
- If you don't have to sell now - Don't! If you can wait it out, real estate equity rewards the long term.
- If you're "moving up," say, from a modest home to a larger, nicer one - to accommodate a growing family - Good timing! It always pays to move "up" in a "down" market. You may take a big hit on your sale, but think of the "net gain on equity" when you let me help you negotiate a great deal on the new house!
- Keep emotions out of your sales mix. Although Duke's basketball team often beats my Georgia Tech Yellow Jackets, I admire their coach, Mike Krzyzewski (how do you get "Shashefski" out of that?)... Why? Because he is a master of objectivity. His system of recruiting and coaching is based on logic... and it works.
- There are far more homes for sale, than there are buyers to purchase them. The supply-demand curve is quite steep in the buyer's favor. If you bought IBM stock for $200 a share, you won't like today's high of $96, but that's the market. Simply put, it is what it is!
- Don't be angry at the market. It will only keep you from selling.
- Remember "Location, Location, Location?" Well, it's been replaced by, "Price, Price, Price."
- Fix it up! It used to be that you fixed it up to get more money, and to en extent, that's still true. However, the real reason is to stand out in a market crowded with old, dirty, ill-maintained, trashed properties. You don't have to renovate the whole house, but cleaned carpets, fresh paint, and landscaping go a long way to separate you from the crowd (whatever your price range). Your mantra should be, "It's Showtime!" There is a reason why model homes look so good... They make you want to buy them!
- The rules are the rules. If you live on the Ocean or the Intracoastal Waterway... or on a Salt Water Canal... or in Hammock Dunes/Island Estates... or Hammock Beach or Ocean Hammock, etc., your situation is not exempt. The crazier that prices got on the high side... well, that's the crazier they may get on the low side. Those stories about $750,000 building lots on the golf course selling at auction for $250,000? They're true!
- Don't be guilty of these classic seller stances:
- "We don't want to give it away."
- "In order for us to do what we want to do, we need $________ at closing."
- "Let's just try it at this higher price and see what happens."
- "We expect our agent to run lots of ads and hold open houses."
- "Let's try this on our own... Let's be For Sale By Owner."
- "The market is so bad that an agent can't really help us."
- "Well, another agent said we could get a whole lot more for the house."
- "Our home is better than all the others."
- "We heard that the house down the street sold for $________."
- "Our price shouldn't be affected by all the distress sales."
- "If it doesn't work out, we'll just give it a rest and try again in a few months."
- "We can always rent it out and sell next year... when the market is better."
If you are thinking of selling, test your "motivation mindset." Where is your need to sell, on a scale of 1 - 10? Today's reality? It's all about price and motivation. How's this for a cautionary closing statement:
"If you're not at least an 8... Wait!"