The term ‘brig' entered into the English language to describe a two-masted sailing ship, square rigged. As the U.S. Navy and Coast Guard evolved, the term ‘brig' was used to describe the holding cell on board for drunk and disorderly sailors.  Today the ‘brig' refers to a jail on any military base. Watch an old movie like the Great Escape and you'll see Steve McQueen earn himself six months in the brig.

What does six months in the brig have to do with Monmouth County, New Jersey real estate?  This year's spring real estate market is characterized by the overall decline in values and sub-prime mortgage woes. If the number of foreclosures drastically increases, that will add more inventory to an already bloated market. Gone are the days of multiple full-price offers. Sellers are challenged to price their homes correctly at the early stages of marketing. Many homes and their sellers are finding themselves trapped in the brig.

I have analyzed the closed sales for single-family homes in Monmouth County over the last six months. The table below summarizes my findings. The ‘brig' homes that remained on the market for six months sold for less than 20% of their original list price and took twice as long as the average home that sold in the same period. The average home (one of the 1,898 sales) realized a discount to list of only 6% and sold in three months, three weeks.

So if sellers drastically over-price their homes they can expect to:

1. Take twice as long to sell than competing properties.
2. Sell at an average discount of 20% from their original price.

That "double whammy" represents a losing equation for all parties. The sellers are still required to maintain their home, pay the mortgage and utilities. Then tack on the additional emotional burden of keeping the home clean, bright and ready for showing. Canceled showings mean missed opportunities to fish, shop, go to the beach, spend time with loved ones.

The listing agent has to spend more time and money marketing the property, as well as communicating market updates to the sellers. And very rarely is there good news when the market is moving away from an overpriced listing.

Unfortunately the overpriced listing falls into one of the more insidious traps of our human psychology: Nothing worth gaining should be gained easily and quickly. It has to come at a high financial and emotional cost.

We have all confronted the frailties of human emotion when negotiating with an unrealistic seller:

• Why should I pay thousands of dollars of equity to a Realtor for three weeks' work?
• Why should I give my house away at a lower (i.e. realistic market) price?
• You never know. Someone may come along and pay my price, so I'm not giving it away in the first week or month.

How do homes become over-priced in the first place? A few reasons:

•·         It would be easy to blame all pricing mistakes on the listing agent. However, it is not an exact science to "price" a home, especially if the house is custom-built. Townhouses and condos are easier to price because square footage, location and number of bedrooms usually remain constant. Seasonal homes and vacation retreats are also difficult to price. For a detached single-family home it usually takes me two full days of analysis, property inspection and research to determine a range of value and I detail my approach in writing.

•·         Very often the sellers' financial needs factor prominently into market price. When property owners start calculating ‘what they need' versus what the market will pay them, disappointment is usually afoot. Some folks just won't budge on this line of thinking. That's a green-light for the Realtor to grab hat, coat and tape-measure and make a mad dash for the door (any door, the closest door or use a window if you can't find a door).

•·         The market changes, often abruptly. Inactivity means a lack of data. With some properties, recent comparable sales (i.e. "comps") are hard to come by because nothing is selling. Now the seller and listing agent face a vacuum of information.

•·         A zoning change in the neighborhood occurs while the house is marketed. Perhaps a farm is converted into a sub-division or a townhouse development is approved a mile away. Same house, very different scenarios.

How can buyers take advantage of this information? As my research indicates homes on the market longer may be a better buy than newer listings. Some of the prevailing ‘wisdoms' are anything but.

•·         "There's something wrong with that house. Everyone has passed it up." Just because a home has been on the market for six months is not an indication of defect. ‘It' could be out-of-style or eclectic but still fundamentally sound. ‘It' could be a great bargain. "It' could be waiting for you to submit a discount offer. You'll never know until you look inside.

•·         "Those sellers are unrealistic and firm in their price." Einstein said, "In the middle of difficulty lies opportunity." Sellers in the brig for six months may be highly motivated to negotiate with a buyer, especially if they haven't seen one for awhile. You never know a seller's motivation until you submit a written offer.

Andrew J. Lenza is the Broker/Owner of his own realty in Colts Neck, NJ. You can e-mail Andrew at andrewlenza@verizon.net or visit his company site at http://www.lenza4real.com/