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Is It Really That Bad?

By
Real Estate Agent with Al Filippone Associates

Is It Really That Bad?

Reuters recently reported the stock of unsold homes surged 10.5% to 4.55 million units. Their stats come from the National Association of REALTORS but it is deceiving to look merely at the numbers. The media thrives on a doom and gloom housing situation. Right now they are scaring buyers and sellers into thinking that we are drowning in inventory. I would compare the news reports on housing to a tsunami when the reality is we are in the middle of a hurricane. Both destroy lives but the perception of a hurricane is that they are seasonal and people will survive. After a tsunami entire communities are wiped out and they may never recover. Inventory is high because of sellers, buyers and banks (OK, I am master of the obvious but let me explain...)

Sellers with overpriced "dated" homes on the market 300+ days aren't reducing their prices. They continue to wait in hopes that some uneducated buyer will purchase their home for more than it's worth. (I know a seller who had a cash offer for $20K less then the list price of his property and he didn't accept it EVEN THOUGH his property won't appraise for what they are asking.) Then there are the sellers who are over leveraged because they took equity out of their home to buy "things". They refuse to accept the fact that they either have to remain in their home or sell it in a short-sale. (I had a buyer who made an offer on a home but seller didn't accept because she "needed" list price so she would have $20K to move - a buyer isn't going to overpay for a home because a seller needs to have the money to move on.)

Anyone working with buyers knows that there are people who want to buy. Yes, expectations are higher and they should be BUT buyers need to be realistic too. (I have a client who wants to spend $300K but insists on 3 bedrooms, 1.5 baths, AC, hrdwd floors, city sewer/water, and move-in condition - it sounds reasonable except the two towns in Fairfield County he wants to live in have an average sale price of $430K.) Whenever I have a buyer who can not find what they are looking for on the MLS s/he says to me..."what about foreclosures?" Here is the reality of foreclosures - most (not all) people are foreclosed on because they don't have the money to stay in the home which means they don't have the money for upkeep or to pay utilities and the home is in disrepair. Worse are the properties in the middle of a divorce - people do horrible things to spite ex-spouses. There are opportunities if you don't mind a long search and a lot of sweat equity.

Banks are another challenge. Many (not all) REO (Real Estate Owned/Bank Owned) properties are sitting on the market because banks are as unrealistic as the rest of them. It is shocking when an offer that is 85% of list price isn't accepted on a house that needs tons of work and has been on the market for almost a year. You would think the banks would want to get these properties off their books. It's even worse when you are negotiating a short sale for a client that takes 4 months and two weeks before the closing the bank throws in a new stipulation (like a reduced commission or no deficiency release for the sellers are a couple of examples) and then says, "We'll just repossess the house, we don't care." WHAT???

A lot of negative energy is creating unrealistic expectations and a difficult environment to buy and sell real estate. BUT don't be fooled by the reports. For every overpriced house there is a beauty priced perfectly, for every unrealistic buyer this is one eager to pay market value for a property priced home and for every bank employee that is a challenge there is one that is efficient and helps make the entire process run smooth. This is NOT a tsunami, we will weather the hurricane and hopefully come out smarter consumers.

Stop by next week to read helpful ways to "curb" expectations. Until then, be distinct in all you do.

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