Good Morning Everyone,
First let me apologize for the length of this article, but please, if you are one of the many who’s listing expired without an offer this fall, it is worth a read.
With the beginning of November comes the unofficial end to the summer buying season. As a result many listings for properties expire at the end of October every year. Most were listed in the spring, to target the summer buyers. What is sad is that they expired at all. They didn’t sell this year and considering the high number of those that expired I did some research. I pulled a few of them just to see why that number was so high. What I found really didn’t surprise me but it made me feel bad for those sellers because those listings were “bought” by the agents who listed them six months ago.
What does that mean exactly? Well it means the agents took the listings at any price just to get a sign in the yard. They knew they were grossly overpriced but they wanted the listing so in essence they told the sellers what they wanted to hear to acquire the listing. They did not tell the seller’s the truth about values, they allowed their sellers to believe that it was 2007 again and prices had gone up exponentially overnight. Nothing could have been further from the truth.
The reason this happened was because early in the year there was a marked lack of properties for sale. The news stations were saying this year was going to be a seller’s market and because of the lack of inventory prices were going to skyrocket. People bought in to that media nonsense, and as a result acquired many jumped on the bandwagon with overpriced listings because it was going to be another boom year. The agents themselves were scrambling to get listings, any listing at any price, so they would have something to put signs on or to put on their websites to attract those summer buyers. What they didn’t tell their sellers, or perhaps they tried to tell them, was that it was unlikely that their homes would sell at the prices listed. They took the listings anyway with the assurance that they would follow the market through the season and discuss changes with their sellers.
The reality of the season was far different than anyone anticipated. There were buyers in the marketplace but they were pretty savvy about pricing and those overpriced properties didn’t attract much attention. They lingered through the summer, some may have tried to drop those prices at bit as the season waned, but it was too late. The damage was already done. The buyers bought but they didn’t buy those overpriced properties.
While we did see a slight increase this spring over the close out prices of fall 2012, prices do not go up 50% or more in a few months. This Spring I was shocked to see the prices on homes that came out for the summer season. 50% was probably conservative; many came out at almost double what their values would have been at the end of the summer season in 2012.
Overall this year prices went up about 11.5% nationwide. Let me give you an example. Let’s say at the end of 2012 a home might have appraised for $150,000. In the spring of 2013 assuming that prices had increased a bit that same house came out priced at 11.5% higher to show that increase in value. That would meant that price should have been priced somewhere in the high 160,s to low 170’s to allow for a bit of negotiation room. What actually happened was that house came on the market in the 225K to 235K range. They didn’t drop enough though the year to attract much attention and now the summer season is over and that home didn’t sell.
To me that is pretty sad. People who want or need to sell deserve honestly and “buying” listings just to get a sign in the yard in my opinion is a disservice to the client. My question to you is “Did the listing agent who bought that listing to have a sign in the yard do his/her duty to the client?” I don’t believe so. They wanted a sign in the yard and a listing to put on their website to attract buyers to whom they could sell something. Maybe not their listing, but it might get them a buyer for a home somewhere! It might even generate another listing down the street with a seller who was more realistic.
I pride myself on my honestly with my listing clients. I believe they deserve the truth even if it isn’t what they want to hear. I have walked away from many listing possibilities because I would not compromise my principals just to have a sign in a yard or a listing to put on my website. I feel it is not fair to my prospective sellers to give them unrealistic expectations that are bound to end in disappointment.
I have found on the few occasions that I did waver from that belief that the issue becomes even more complicated. When you put a high price on a listing just to get the listing, the seller’s psychologically believe that is what their home is really worth. Then when a truly good offer for that property comes in they don’t want to accept it because they think they are short changing themselves. They aren’t, and they wouldn’t be, but they hold out hope that someone who is ignorant of the true value of their property is going to walk in the door and give them their listed price.
That rarely happens. There is simply too much information on the internet where values are defined by the closed sales in any given neighborhood. They aren’t always correct, but the buyers spend their time searching for that information before they ever seriously consider buying a property. They feel they know what a home is worth before they ever see it. In the buyer’s mind they know what they are willing to pay for a property and they rarely waver from that belief. They may be willing to compromise a bit, but there is not a property in the world that today’s buyers will “fall in love with” and be willing to overpay for it to acquire it.
If your home is one of the many that expired at the end of October without getting an offer, you should ask yourself why that is. Did your agent “buy” your listing or tell you what you wanted to hear just to have a sign in the yard? “Buying” your listing is not in your best interest. I know, maybe you don’t have to sell but having a home on the market for six months or longer is still disappointing. If you are still considering selling, give me a call. Contrary to common belief there are still buyers in the marketplace in the winter months. This could be your window of opportunity to sell your property when there is less competition and when the winter buyers are out and about. Winter buyers tend to be serious buyers if they are out looking in the cold weather. Give me a call and let’s talk. You will find that above all I will be honest with you and let you know where I realistically believe your property should be priced. If you decide to wait it out, that is okay too. Just bear in mind that interest rates are fluctuating now and are expected to climb in the next couple of year. Higher interest means less buying power so that could put some pressure on prices once again.
Thanks for reading; I hope to hear from you soon.
Sandra Paulow, Associate Broker, GRI, SFR, REALTOR® 928.242.0300
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