Real Estate Investing

I just read with great interest what my friend Miranda Marquit wrote about “sticky” asking prices where sellers are reticent about pricing their homes at the current market value.

These “sticky” asking prices are probably among the main reasons that existing home sales continue to languish. Homeowners who bought their homes before the real estate bubble burst and home values dropped are stuck with this idea that they “have” to get a certain amount for their houses. Unfortunately, it’s a buyer’s market and sellers may have to re-asses the feasibility of their asking prices. Even if it means accepting less than they’d like.

In fact, one of my listings just expired last week and I’m not sure if 1) the seller will relist and 2) I’d relist even if he wants to.  The home has been on the market for over a year - I’ve had it for just at three months.  None of the other agents did anything to market it, but I’ve taken tons of photos (and have changed them seasonally), put it on all the online real estate sites I can find, have put together both a visual tour of the property and an animoto slide show.  I held one open house in which one couple came through - they made the loop in about 2 minutes flat.  And there have been ZERO other showings.  I think he’s priced too high for this market, though it’s still comparable with other homes in the neighborhood.  If he wants to sell it, he needs to price it lower.  Plain and simple.

I’m working with a buyer who’s coming by tonight to work on a contract for another home.  The seller of the home in which she’s interested bought the house three years ago for “X” amount.  Since then the housing market has tanked.  You know it, I know it, everyone knows it.  Except that seller and his agent.  They are trying to sell this home for $20,000 more than they bought it three years ago.  Ummmm hello?

So $20,000 may not be a big deal when you’re talking homes in the $200,000’s and upwards.  But when it’s in the $130-150,000 range, that’s a lot of dough. We’re going to make an offer for what the comparables say it’s worth.  And that’s all my buyer is willing to pay.  I’ll do everything I can to convince the other agent so they can convince the seller, but I’ll be surprised when they have it priced that high that the contract goes through.

In this market, sellers must face reality if they really want to sell.  If they need to make more money than the market calls for, maybe it’s they should consider a for sale by owner so they can keep the $6000, $9000, $20,000 commissions.  It will take a lot of work to do it on their own (advertising, contracts, etc.), but if they’re that stubborn about the price and know more than the market, they surely can handle it.

Sellers need to get serious about selling - and realize it’s not the agent that determines the value but the market - and stop wasting everyone’s time.  Time is money, afterall.

Photo from the Hoboken Real Estate blog.

For Sale by Owner sites sometimes seem rabid in pointing out that Realtors like to frighten home owners and buyers into hiring them when they sell or purchase a home.  I had one pro-FSBO’er actually write a comment once, “More scare tactics from a Realtor…”

I’ll be the first to admit that not every seller needs an agent.  Sometimes they’ve done their research, they’ve sold homes before so they know the process, and they’ve got plenty of time and energy to do the work themselves.  The parents of my daughter’s best friend from way-before-I-was-a-Realtor sold on their own - sold it the first week it was on the market!  I was amazed at their good fortune and even considered selling my own home by myself.  Then the nanosecond passed!

Scott Daniels of Florida Real Estate reminds me why I hired a Realtor those six years ago when he wrote Mr. and Mrs. FSBO doesn`t care about you! Buyer learns the hard way, why they need a Realtor!  Scott says,

Apparently, the home never appraised for the purchase price, after several attempts of going back and forth with the Seller to no avail the Buyer wanted out of the contract!

No such luck!

The seller and the attorney holding the escrow were adamant about keeping the $7500. They explained to the buyer “The Loan Commitment” expired and they have to “Buy The Home” regardless of appraisal issues.

Unable to secure a loan the buyer is in a huge bind!

Again, I won’t argue that sometimes it’s okay to sell on your own.  You’re probably a stubborn, determined person who works well on your own.  BUT I would absolutely always recommend that buyers find a licensed real estate agent to represent their best interests.  If the FSBO is unwilling to pay your agent’s broker a commission for bringing you - the buyer - to them, then you can (yes YOU!) pay for the services of a Realtor yourself.  Commission is negotiable, so it could be as simple as contacting a real estate company and asking for limited services (like explaining and filling out a contract).  Or you could take a contract to a real estate attorney.

Caveat emptor has been around for a long time - for good reason.   May the buyer beware!

In a class this morning, Mimi from our auction team was asked by another agent about how to conduct an eBay auction for a house.  Mimi’s answer was very eye opening, “You don’t.”

Her colleague Dale further explained that unless you’re the actual owner of a house, real estate agents can not auction homes on eBay unless they are licensed by the state as auctioneers.  Real estate broker Tom from St. Louis, Missouri says on the Homes & Agents site that you only have to be a licensed real estate agent to sell homes through online auctions, so this points to rules varying from state to state.

I suspect you could auction a mobile home - without the land - because it’s considered personal property rather than real property.  For example, if a seller calls me who lives in a mobile home park to list their trailer, I could not because Realtors sell LAND and any house or building on it is considered an improvement that adds value to the land.

Overall, regular real estate auctions are picking up.  Douglas Heddings of True Gotham Real Estate Blog says,

They key once again to creating the perception of value is to aggressively price the property to appeal to a larger pool of buyers.  A tricky task in today’s less heated market. 

In today’s less heated market, everything is a tricky task - from finding the right marketing strategy to pricing to figuring out how to compel a buyer to offer a fair market price when they’re under the perception that sellers are giving their homes away in a buyers’ market!

Meanwhile, I visited the real estate auctions on eBay.  In one hour, 47 minutes, the bidding will be over for a home in Flint, Michigan.  Current bid: $5300.  Two bedrooms, one bath.  “Great investment property.”