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It is a Buyer's Market, have we bothered to tell our sellers?

We all know it is a buyers market, Katie Couric, a.k.a. CBS's Real Esate Guru, told me so on the CBS evening news a couple nights ago. So has every other media outlet. All the Realtors know and so do the Buyers, but has anyone bothererd to tell the sellers yet?

Obviously, the sellers also see the news on TV and in print so they "hear" it, but has anyone really told them what that means to them?

Have you sat down with your sellers and talked about assisting buyers with closing cost, paying for home warranty's or taking an offer even though it may not be the ideal, but it is nonetheless an offer? Have we told them their home is one of thousands to choose from and the buyers are looking? Do they understand that lending quidelines are tighter now and that an offer from a person who actually has a good enough credit score is nothing to shove out the front door because the thought of paying some extra's is out of the question?

I personally am working with 3 active buyers. They know the market, but seemingly the sellers are oblivious. My buyers are prequalified, ready to buy and KNOW there are less of them and many more sellers than there was 2 years ago.

My goal over the next few weeks is to have dialogue with every single seller and explain to them that if they are fortunate enough to have a person pick their home over the 20,000+ other available ones in my county, they should see that buyer as a friend, not a foe.

Posted by Kimberly Lang on 07/27/2007 08:38 PM

Comments (48)

first time home buyers, sellers, negotiations

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48 Comments on It is a Buyer's Market, have we bothered to tell our sellers?

JUL

2007

It's hard to get the sellers to understand that it is truly a buyers market. From a listing side, the sellers think they are losing money on the sale of their homes. We need to tell them that they cannot lose something that isn't there. The market took our equity..and whatever they buy after the sale of their home, they will too get a great deal on. can't have it both ways!

I know several appraisers and all of them will tell you that they will not go outside their market area and appraise a house or property. This is because the market is different everywhere. If you listen to some goofball on cbs or cnn fox or what ever to tell you what your clients property is worth you listening to the wrong people. It seems to me while less houses are selling or selling at a slower pace prices continue to rise.

It's true, that some sellers are oblivious of the market. We should not fail to consider the sellers side of things.... it's always about finding the happy medium where both parties come out feeling good and not one winning at the disadvantage of the other.

I am finding that sellers don't get it and the real estate agent takes the over-priced listing because they will lose the listing! So, it seems to be a very difficult stiuation. I like to look for properties that already have "tested" the market and have had a reality check! Otherwise, buyers may just be spinning their wheels.

Joan-- I like the term "tested" it is very true. You find a seller with an expired listing who has been on the market at least 6 months, you have a tired, ready to listen seller!

Many times agent #3 is not the smartest, he or she simply showed up after Realtor no. 1 & 2 have beat their head up against the wall trying to get them to see the truth.

I have had the conversation with my sellers but some still can't get the gains of the last few years out of their mind, here is hoping reality with set in soon.

"Katie Couric, a.k.a. CBS's Real Esate Guru" HA! haha =) I actually lauged out loud when I read this.

1. If the seller's are motivated then they get this concept, if they aren't then they don't. When you really want something you find solutions, not excuses.

2. Real Estate is cyclical....if a seller can wait it out, they can probably get their price.....someday the market will catch up, it's just how long do they/you want to wait?

Good post by the way...and I'm still laughing about Katie!

Hi Kimberly....rather than asking "Has anyone told the sellers it's a buyers market?" we should be asking "Do any Sellers believe it's a buyers market?" I have many sellers tell me they know it's a buyers market and do what they can go be cooperate but others seem to be in "Denial" or more like "Selective Memory". Good post and have a great weekend.

Its so funny, because the sellers don't get it when they are selling their home - but then when its time to buy, they suddenly get it.

Kimberly, I have this talk at least once a day with a seller. They know it, they read the reports, they hear the media, but like George said, "they are in denial ".

Kim,

Sellers are the last sector in the real estate arena to accept that it's a buyer's market. You are right about that. It's so hard to acknowledge that the value you had a few years ago has eroded, meaning you are actually losing value. Who wants to admit to that? But, yes, if the seller wants move the property, he should follow the market conditions.

kimberly,

um, i dontthink they (sellers) have realized this yet...especially not mine! it totally just sets me back everytime i speak to them.

Dave,

When I list a property I set them up on auto-email for all listings in their development, as the homes take price reductions, and new ones go on the market they are updated immediately. When I speak with them they already know all about their area because the emails have already told them about their competition. They are able to come to self realization with less fierce conversations from my end.

I love MLS autoemail!!!

Great post. It's the same in my area...

Great post kimberly. Some sellers just don't know that they are only hurting themselves when they are turning down good offers from some ready,willing and able buyers. Again like you said,this is a buyer's market,not a sellers market.

I think we have to keep on telling sellers the reality of todays market. Sellers just do not want to believe that they are losing thousands on their homes from what they were previously able to sell at. They feel their homes are some how different and special. Which is not the case at all. A seller not willing to negotiate is a seller not worth working with. Great post.

Amen! Very well stated. I think that Sellers are beginning to understand although it is a painful pill to swallow. Sometimes, the hardest part is coming the realization that this may just not be the right time to sell!

Look at that pruddy star - way to go.... I sometimes wonder too.... no matter how much I explain there is always one in the bunch that does not get it

I have just the opposite problem, in many areas of Athens, GA it's not a buyers market, in fact I just posted on my perfect buyers who lost their perfect house because they chose to disbelieve my statistics on the housing market in our area and make an offer based on general market information instead. They entered an offer $20,000 below list price and another offer was accepted. Real estate is very local and not all markets are falling.

JUL

2007

They hear the words but many of them have not quite understood exactly what this means. We have to educate them.

Sellers hear it too but they think their house is special, so the market conditions don't apply to them.

All real estate is local and buyers/sellers should be taking advice from the Local Real estate agent... not the media.

Kimberly,

Good post---A couple of weeks past, I set a goal to get reductions on every one of my listings. I'm 95% of the way there. My sellers were great and understood the situation completely.

How is your market in Fort Myers? I have a rental villa in Boca Grande area (just a bit north of you.)

Some sellers in my market have surprised me. One of my sellers was very happy to get, accept and settle on a contract that was 10% below the very fair list price. In another case, I had a buyer make an insulting offer, and the seller agreed to just $2,000 over the initial offer. Now, if we could just get through to that seller who not only turned down flat my buyer's very fair offer, but also came back with a 15-day sellers contingency on finding a home!

Great point, sellers still think it's 2004 and that people will start making offers over asking price and their house will sell in 1 day.....The typical market takes about 6 months on avg. to sell a home and interest rates are about 8%.

Great post, Kimberly. While the sellers have "heard" it, as you so aptly point out, they probably have not been told, in detail, the implications of what this might mean for them and ways to deal with it. How about mortgage buydowns instead of a huge price reduction, as one example. Keeping them informed regularly of any changes is so important, especially where markets continue to shift.

Jeff

Forget the gimmicks like paying closing costs, warrantees, plasma TVs etc. Price is king. Price is the primary deal maker or breaker right now.

You want to sell? It's simple: Price the home within the bottom 1% of all comps. Not the bottom 10% or 5%, the bottom 1%. Buyers have hundreds of homes to choose from, literally. Inside the bottom 1%, you'll get traffic. You see real buyers with real money. Above 2-3%, have a seat, take a nap, relax, you may get a tire kicker or two stopping by every now and then.

And, surprise! That $50K upgrade you bought with the house, well, it's not worth an extra $50K. That granite countertop and hardwood floor and stainless fridge aren't special when every other comp also has them.

My realtor acquaintances are walking away from sellers who won't price in the bottom 1%. Their attitude is "Why bother?" They have their hands full with traffic to the sellers who are down in the 1%. Unrealistic sellers only waste their time.

Good luck, Kimberly!

From what I've read Ft. Myers is rather volatile these days.

Robert,

From my previous post.

You remarked...

Forget the gimmicks like paying closing costs, warrantees, plasma TVs etc. Price is king. Price is the primary deal maker or breaker right now.

Plasma TV's may be a "gimmick" however, closing costs for the first time homebuyer is as real as it gets to me. A TV is an extra, homeowners insurance for the first year is mandatory. A home warranty buys piece of mind for first time homebuyers that if the A/C goes out in the 2nd month, they won't be looking for a home equity line of credit to fix it. So I do agree with the TV gimmick but feel the warranty & closing costs are tangible tools to help close a sale.

One of the problems is NAR's ads that say "Now is the time to Buy and Sell"

Kind of like Merrill Lynch saying. "Now is the time to buy and sell GE stock"

2 of my listings are very aware of the buyers market. However, they are of the breed that still believe that their home is worth what it was 2 years ago. Here is how I have it handles, it may not work for all, but it has worked for me because these 2 people aren't in a particular hurry to move, but need to within the next few months because they have purchased other properties. Luckily, their time-lines gave me plenty of room to start!

I worked the market analysis and explained the "average listed" and the "average solds". It's ok to be in the ball park of average listed at first to test your footing, to find out if you will even show in that range. But if we sit on the market for a month or even 2 weeks, and no one calls, thats the indication that buyers are expecting a lot more "house" for their money. It's not an insult to you, or your home, its just what is happening right now.

My people, young or old, seem to understand the concept of testing the market, stretching their time-lines, and seeing for them selves what could happen. This way I am not telling them their home is over priced, the PUBLIC is telling them they are over priced!

In that respect, I have reduced both homes to have great "competitive edge". My premier home was set to reduce by 20k this week, and I would renew the listing with a new RMLS# to freshen it up. Looks like I don't have to though! I am expecting an offer this afternoon, and from what I understand it will not be too far under asking.

This is a great post! Maybe someone could email this post to all sellers.

Great post - I know EXACTLY how you feel. Also, I do have these talks with my sellers and some of them simply refuse to listen. As long as their willing to let their home sit on the market for a while, that's fine. It's the ones that want it to sell TODAY, not reduce the price or offer any buyer incentives are the ones that have to be set free(aka cancelled)! :)

I have to agree with Robert on this one. There are so many new home incentives in Las Vegas and Chicago right now, it's hard to even keep track -- especially if you don't use Salestraq.

With so many homes, you want to be priced in the bottom 1%. Our experience shows that buyers will not make it to the 12th highest priced home on the price range that meets their criteria. Incentives such as closing costs, etc.. will be negotiated by a capable buyers agent anyways.

I tell my sellers NOT to be INSULTED by ANY Offer, no matter what it is for. I tell them that it takes a lot of guts, is time consuming and even scary for a buyer to even WRITE an offer (our typical contracts and addenda are 50+ pages of legalese) I tell them to be glad someone wants their house enough to GO THROUGH ALL that writing a contract involves.

There may be new home incentives but for the first time home buyer in my area under 200,000, they many times need help with closing costs. The sign of a capable agent negotiating can and has been stopped many times by an ill-informed/hard headed/delusional seller.

You can lead a horse to water, but you can't always make him drink...you may salt the oats and still he can be too hard headed to take a drink.

previous comment was for Paul & Michelle not from them

I love how the media experts continue to forecast the turnaround in real estate. Let's see, the first prognostication I remember hearing was for early 2007, then late 2007. Recently it has been early 2008 and in a few months, it will become late 2008. The same thing happened with the predictions of a bursting bubble for real estate a few years ago. Throw a dart, then another, until it happens. Anything to keep a story alive, I guess.

I can only speak for MY area & MY opinion...

I see it staying this way around here (sw Florida) until 2010......Now I'm sure to get reaction out of that, I am simply basing that on the following factors....inventory, length of time to absorb said inventory, new home competition, rates, prices, the economy in general , global warming, Lyndsey Lohan's trial date and last but certainly not least...Who shot J.R.

Oh wait, I already know that outcome.

It has taken awhile for this to sink in. But finally they have decided to believe me and with some persuasion have dropped their prices....and to only realize their home sold.

Denial is the word of the month in my practice. Sellers believe the reason their home hasn't sold is everyone's fault but their own. I maintain the simple notion that wherever the problem may lie - buyer's market, poor location, too much inventory - it can all be cured by price.

Wake up sellers! Lower your price, consider concessions and the buyers WILL come.

If I can I've been trying to present my buyer client's offers to the seller and their list agent in person to help explain the situation that exists with higher inventory levels of property for sale and fewer buyers. Sometimes the list agent may not be comfortable.

Plasma TV's may be a "gimmick" however, closing costs for the first time homebuyer is as real as it gets to me.

Price reductions are as real as it gets. If the seller's willing to pay $20K in closing costs, have them reduce the price by $20K instead. You'll get a lot more traffic.

If a buyer doesn't have closing costs, that's a big red flag that they're deadbeats. And if the seller is paying the buyer's closing costs without telling the lender, you are all on thin ice. That's arguably mortgage fraud.

All great points but the buyer's do have a tendency to hold anything and evrything over the seller's head. Oohhh, that's right, the seller's had their turn already. The situation we are in now gives new meaning to the phrase, "buy low and sell high".

JUL

2007

Robert....

Who said anything about NOT telling the lender? I am on NO thin ice. I completely disclose and with the programs I am using the sellers can contribute up to 3% of the price of the home for closing costs.

Make no mistake about it... I am an honest Realtor, and value my license! I do not partner with mortgage people who break the rules.

Perhaps in your neck of the woods first time home buyers have 7,000 for closing costs. In my county the young recently married couple has not saved that up yet. I am certainly not going to turn away a buyer based on that and don't consider them deadbeats or a big red flag.

Somep buyers maybe "holding it over their heads" that is the nature of people, the market is cyclical. The Realtor should step up to the plate and negotiate without strong arming.

Perhaps in your neck of the woods first time home buyers have 7,000 for closing costs.

A buyer without closing costs to cover the transaction should not be buying a house. If they can't afford $7K for closing. how on Earth can they afford property taxes, insurance, repairs, upkeep? What happens when the roof needs repairs?

As an ethical realtor, which you appear to be, you should be asking these questions. Why are you trying to put deadbeats who can't even pay closing costs into houses? Tell them to save their money and come back in 6-12 months. Prices aren't going up in Ft. Myers. That $300K home will be $260K-$270K this time next year. Wouldn't yuo feel better if they came back next year, better qualified and then bought?

Don't be "that Realtor" who places closing the deal above morals. We already have too many of them.

JUL

2007

With all due respect, you run your business up North and I'll run mine.

To cut to the chase, I don't need you telling me not to be "that Realtor", I rest well at night with my morals, it is well with my soul, and in this market (remember the posting..."It's a buyers market have we told our sellers" Perhaps I should have included " And a few Realtors" as well.

JUL

2007

It never hurts to tell your sellers about builder incentives in the area.

I agree with you...People only tend to remember the positives of something; it's human nature. Buyers usually don't want to hear that things currently aren't in their favor. By educating them of the changes and why they've occured, we have better chances of ensuring smoother transactions.

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Kimberly Lang

Fort Myers, FL

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Keller Williams Elite Realty

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