Real Estate Blog - Market Price or Wish Price?

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Market Price or Wish Price?

I originally wrote this blog back in October of 2006. It was my very first blog but I'm reposting it so we can look back at how close I was to my predictions. Please note that when I wrote it...I wasn't as experienced in blogging as I am now but my knowledge of the market was pretty close to the outcome we are seeing now so enjoy the content!

looking into my crystal ball

Unfortunately for sellers... they are still in that mode that it's still a sellers market and they are still looking to get that big 25% return we were all getting the last 3-4 years, I ...as well buy property and sell,rent or flip or whatever else you want to call it so I can relate to their disappointment.

But because of rising property taxes and ridiculous reasons insurance companies just drop HO's like a hot potato...we will start to see a change. Prices are starting to level off and I anticipate that they will surely start to drop at a drastic pace if something isn't done.I remember when things were different and they were just used to those crazy returns. If you think about it.... in a normal market we should be seeing about a 3-8% return.

That market was unreal and it did exist but I was thinking that eventually it will have to change and we'll look back and see it was fake...never should have been and although people have capitalized on it....there are some who will probably be hurt badly.

I'm surprised at how many people qualified for mortgages that couldn't even afford to pay their cell phone bill. How could this be real?

I can't tell you how many price reductions I see in the MLS and how much time sellers are wasting. This is the new meaning for most price reductions. I tell my clients that we'll keep reducing until the market reacts.... or if they continue to insist to price too high...they'll sit longer on the market and reductions will continue.

If a homeowner insists on pricing their home way too high and they get an offer without any comps to support it...then how will it appraise? Will appraisers puff up their numbers? Or will they follow the rules.

I hope that whoever is monitoring this will understand that it was out of control and unrealistic. It can't last much longer and this will cause many homes to be lost if prices come down and people lose their jobs.

These wish prices can't come true for too much longer.

Remember....what goes up ...must come down!

For more information please contact Neal The Real Deal Bloom-CRS-Realtor® /Remax

2500 Weston Road ,Suite 103

Weston FL 33331

(954)608-5556

Posted by Neal Bloom-Realtor ® Assoc.-CRS-Weston FL on 10/02/2008 10:52 AM

Comments (67)

Market Priced Properties in the ActiveRain Channel

market price, wish price, sellers, mortgages, realtors, real estate, inventory, pricing, prices, returns

Originally posted at: Weston Florida Real Estate Blog, Neal"The Real Deal"Bloom : Market Price or Wish Price?

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67 Comments on Market Price or Wish Price?

OCT

2008

Neal...

When I go on a listing appointment, I hate to hear those dreaded words: "I need to get..." OK, so what what. What the seller needs to get doesn't amount to a hill of beans!

You were astute back then, but I'll bet you didn't think that it would last this long!

There are a bunch of posts that have been redone along these lines. So many of us , you too, were right . But some how I do not feel happy about being right this time

Good morning, Neal. I think it is point on, the only difference I see as that the majority of the sellers at least in Michigan do understand the values have dropped.

Richard,

I feel the same way as you...hearing those words hurt and I hope some of those sellers read this.

Charlie,

So true...I want to be right but let's face it...no matter how you look at it...that should have never gone up on a weekly basis...even on a yearly basis was crazy.

Missy,

I hope they read this.

Neal, It's very interesting going back and reading some of our old market reports. You were right on the money!!!

BB,

Funny because I didn't consider it a market report...just my thoughts at the time. Pure feelings.

Neal, let's just hope that what goes down must come up again - sort of like my weight!

Patricia,

It might go up but it isn't going up by much if any...correction can take years unfortunately.

We do have a long wait to get back to the confortable 3-8% appreciation. In the mean time, the market is in chaos. We need order.

But, all is not lost. We'll soon be able to keep up to $250,000 in one account at one bank. Isn't that wonderful??

You pegged it. You saw it coming and it came. It is actually pretty sad. I also couldn't understand how someone could not obtain a loan for a motorcycle yet purchased a house one month later. It's true because I sold it to him. He was shocked but very happy. BTW- We still stay in touch and he has purchased three investment properties since then. He is one of the unusual ones.

Neal, how about writing one about housing prices going back up again :) :)

Those of us who can ride out these ruff times will enjoy the good times again.

Lenn,

There is no order...other then...my order of fries from Mickey D's.

Mel,

Pretty sad indeed...now the ones who were buying everything under the sun are forced to liquidate.

George,

Sorry but I can't help you with that today:)

I just got an email from a seller from back in 2006, thanking me profusely for sticking to my guns and making sure the deal (which was so close to falling apart) stayed together. Their old house would be selling for more than $60,000 less in today's market.

Kelly,

I wonder what the buyers would say today.

It's nice to know that one's thoughts were on the right track, especially when they were ahead of the pack -- what are your thoughts, now, re "recovery time"???

It is all upto the agent when the pricing issue comes up, you either are a listing collector or will price the property correctly and be the selling agent taking a paycheck home

Li,

I would guess it would take at least another year...maybe by 2010.

James,

I'm actually finding that not all agents can control the price...sometimes the sellers want what they want regardless and if you take it....then it will sit until they come down and by that time...they are behind anyway.

How right you are on this topic. I'm finally learning to not take a listing if the seller is not willing to list at the comp. prices. I let the seller know that in a month we will have to revisit the listing to adjust the price to the market. If they don't agree it's not worth my time, because their house won't sell.

Pat,

We had a call from an old client who was going to sell a home we sold to her. For some reason she went with another agent to list it for sale. My partner knows her very well so I guess she felt some sort of conflict...any how...her agent priced it about 200k more than the market can bear right now...she called us to ask us to give her our opinion on value and was going to list it with us...we told her unless she priced it within the range we gave her ...we didn't think it made sense for her to either fire listing agent or expire the listing. She never reduced up until this day and she is just sitting...we told her we would be happy to work with her when she came down to earth.

Neal - your right and it is hard to get sellers to understand this!

It is amazing how many sellers are still so unrealistic about the price of their homes. They just don't get it or are in no need to sell.

The Woodlands,

I'm wondering if they will ever know. I understand the ones who can't but if you look now..some of those should have then and wouldn't be in the position they are in now.

Hi Michael,

Exactly like I said right above your comment.

Neal,

Good post, I've lost several listings as of late because homeowners refuse to accept reality.

Jake,

You might have lost them now but when they expire...go get em again!

Neal, the buyers are probably sweating it just like every other homeowner I know! So long as they don't need to sell right now, in time they will realize a gain, don't you think? They didn't overpay by any means (since the house was older and needed updating) and our market was already starting to decline at that time.

Well...this is just as true today as it was then. You can only put so much air into a balloon before it explodes in your face. A wise person knows when to stop blowing hot air!! GBU!

Kelly,

I think the real question is when you buy...if you are willing to hold it for a long long period then hopefully you'll be ok...the ones who bought and tried to flip too quick and then end up in foreclosure.

Elizabeth,

I remember back in 2003 when I kept hearing the bubble words and now people that didn't pay attention figured to stay on the bandwagon as long as they could but i hope they were prepared to fall off as many are doing now.

Neal - Look at this, you were a pretty smart chap even then:-) This post has more relevance now than ever. What else can I say, you were right.

Jason,

Not right but as accurate as I could be:) the smart part I'll take from a a smart guy like you.

It so unfortunate that your predication was so accurate and true. So many people lost their homes and they don't have a place to stay. So let me ask you what is your prediction for the end this year and next year?

There is no doubt a lot of people were right. The only group that I know of that was wrong was congress. A person that cannot pay a phone should have never gotten a loan for a house. But hey he could have gotten elected to congress and gotten millions in campaign funds.

Well, I still contend that if they are simply tire kickers it will come out in the beginning.. If they are difficult in the beginning and all your verbal communication leads to them still conveying concerns, take it to them and decide: do you really need to work together! In today's market taking that chance of working with someone that wants more and doesn't understand the market and values, then WHY are you taking it on as a REALTOR aren't you paying to market? Just my tidbit, sometimes it is easier said than done, but who has intuition and not followed it.. You will then be a part of another form of Bailout!

Wow, Neal, your post was totally on target! I wish some of the folks in charge had been reading your blog in 2006. :) Thanks for re-posting this for some of us who weren't even bloggers at the time your wrote it.

Hi Neal, right on point! You called it then and it happened and continues to happen. I had two potential sellers I was working with and they wanted such and such amount because they owed 50K LESS than that price and they wanted to get at least 50K to put towards a new home, etc. It seems that they just don't get it. If you cannot afford to be there, you must sell! If you job is relocating, you must sell! Seems they are not listening.

We all saw this coming -- but it was incredible that the government was asleep at the wheel! What about those in the govenment that are supposed to be on thop of things! If I were "the Donald" I would tell them all YOU'RE FIRED!

Greg,

As far as the rest of this year goes...kiss it goodbye...I don't see much change...correction takes as long.

Charles,

That's what I always say.....how can you pay a mortgage but not a cell phone bill?

Jackie,

What I'm saying is that although people were buying anything with three legs....sellers have to understand it isn't going to happen any longer at least for now...even if I can get an offer doesn't mean it will appraise. I only comp homes over the last 90 days and if I can't find any then I'll go back 6 months but have to figure a fair discount for market time which isn't easy right now because by the time it closes...it could be worth even less.

Lola,

I wrote that when I was just a little pup around here and it was all from my feelings....I didn't know better to write it expecting many people to react to it...I'm glad we were able to revisit it today because most of it is true.

Ann,

Sellers have to start thinking like appraisers instead of sellers.

Joan,

We all saw it coming and so did Trump...he probably picked up a few himself....the watch dogs weren't watching too well.

I totally get the picture, here in Wichita, we have been very fortunate, however, you are definitely seeing values lower, not plummet but lower, and in some cases appraisals are not being bet, yet not by much.. We all in real estate saw this coming.. but now do we have an even playing field or suck it up and wait.. I am still getting calls from folks that think there's a market for 103% loans, what...???? no TV? Crazy but we are in the thick of it for sure.. Thanks

Jackie,

The bottom line here is...the market sucks for sellers.....it's very good for some buyers if you can get qualified...even with good credit some lenders make it difficult for people to get a loan and the only loans that I've seen on some of the listings I've sold this year were at least 20% down and I've barely sold any of my listings ...most of my income comes from rentals and cash deals we have on a good amount of cheap condos but they sell quick and the buyers are usually happy.

Neal, Congrats for your fall back plan..! YOu are right, it does suck, all we can do is "stand by"... Until then.. Thanks

Neal, you were totally on the mark. I remember feeling the tide changing as the summer was ending in '05 and things are a real mess now. Remember the dot com debacle?

So, what is your next prediction? How much longer do you think this will last?

I will be curious to hear your opinion

Debbie,

Back in 2004 I remember this guy we almost bought a property from....he was saying how he sold off almost everything...he said he thought it would be where it is today and you know what? He was right.

Nelva,

In my humble opinion....if you look at history and how fast things change I would have to say maybe a year ....maybe more.

Neal - It is really interesting reading blogs like yours and Broker Bryant about market pricing in 2006. How relevant was it then, how relevant is it in 2008/09. Did the Seller listen in 2006? Does the Seller listen now ?

Petra,

I think in 2006 they weren't listening and now some might be. I think they have more of an open mind now but there are other circumstances such as people who owe more than they can sell for.

So I wrote a blog on it yesterday. I think you are right its anywere from 1 yr to 18 months

Here is the link. Feel free to comment http://activerain.com/blogsview/717704/How-much-longer-is

Neal,

You sure called it right. Real estate aficionados here, too, were saying a few years ago that this red-hot market is unsustainable and they were right. Although probably no one could have guessed how bad it really turned out to be.

Just what someone "needs to get" or wishes or hopes does not make any difference -- the market will pay what the market will pay.

You called it but you also sold it...and aren't you glad you got while the getting was good? Now the landscape of real estate is changed forever...think out of the box.. 6% ? 5% ? ???? no flat rate real estate is the answer. it is what is needed for this US housing crisis today! Appraisals mean nothing anymore and adding a realtors commission of 6% is unrealistic!!

Flatraterealestate.com

Neal, you and Karnak should get together! You are pretty right on. Did you listen to yourself and prepare? JC...

Later in the rain~Deb

OCT

2008

NEAL

Many of us saw it coming. Unfortunately the ones who were late to lunch, are starving. Here it is turning around slowly-as QUALIFIED buyers are stepping forward and setting reasonable prices which are being supported by comps. I hope the same is happening in your market as well.

Good Luck and sell well.

Esko,

I think we are just going through a big change in the RE cycle but this one is probably not a little worse than we thought it would become.

Bob and Carol,

Wishing in this situation is most likely not going to happen.

Craig,

This post has nothing to do with commissions and I would appreciate it if we can keep the subject matter to the post. I don't discuss commissions on my posts and if you are a licensed Realtor(R) I might suggest that you don't either...thanks.

Deb,

Where is Linda? She must be out selling!

Allison,

What the public doesn't seem to understand is ..we as Realtors have to be motivated...lets face it ..we don't work for free...why wouldn't we want to get people more? Of course we would if it's really possible but we can only get what the market can bear. I'm confused why a seller thinks we wouldn't put all our energy into selling a property but if the price is impossible to get then why be upset with us? Thanks.

Oh what do we know, after all we are JUST REAL ESTATE AGENTS who live and breathe this stuff EVERY DAY!!!!

Price is super critical component. It has to be perfect. It is no longer a sellers market and may not be for years. If a person wants a higher price sell it themselves, call up my competition.

Ok, so did you have the crystal ball or what??? Whats the next market prediction....?

Hi Neal,
I am an exclusive buyer agent on Martha's Vineyard. I think many of us saw the coming of a tipping point, but as is typical we pay little attention to history and hope against hope. I am writing an article right now theorizing the premise that it is the overpriced, ego listings that are slowing the inventory absorption --- at least on Martha's Vineyard.

Buyers are far more savvy and informed than they have ever been. Buyers are also firmly convinced, supported by the media and the steady stream of insipid price reductions that prices will continue to go down. When they see properties that to them are similar but are clearly priced out of lockstep with the rest of the market, they make the optimistic decision to wait for those properties to join the herd and come down in price. I think part of this thinking is based upon the human tendency to want what you can't have.

If those sellers who are not willing to listen to the market (IE their seller agents) and insist on holding a hard line because they think their properties are special, and their posture is "I don't have to sell" would remove their properties until the market improves to align with their expectations, I believe the rate of absorption would increase. Of course with the economy now in waters heretofore uncharted in our lifetime I don't think anyone can say with certainty what tomorrow will bring. I am not a Pollyanna but as a glass is half full person, all I know is this too shall pass. (SplitRockRE.com)

Neal ... thanks for this article again. You were right that the wish list prices can't come true for too much longer. Best wishes. Harrison

What sellers don't understand is that right now there is opportunity in loss for them. If they take a hit on the sell side, they can DEFINATELY make it up and spin a nice profit on the buy side.

I have a sheet that I use in my listing presentation that basically states out all the "seller excuses" on how much they need vs. the market price. Stops alot of it I think but still there is the other one of: I put this much into the house! Who says that adding up every nail, screw and caulk gun added to the price of your house? Is Home Depot and Lowes now in real estate? I think that this thinking is also prevalent with today's seller that just isn't realistic and is perpetuated by HGTV.

There are still sellers out there that want to push for the moon. I haven't seen any getting the moon though.

Oh so true. Reality is slapping many in the face right now, and those who didn't listen to reason are seeing now that all things eventually come to an end.

OCT

2008

Michael,

What do we know?:)

Jim,

Don't worry because when the competition can't sell it ...the sellers will start calling the agents that turned them down now instead of letting them down later.

Sonja,

I can only predict that I'll still be in the business.

Peter,

Because of the crash of our economy...the next 6 months to a year is going to be interesting...when the government starts buying all these bad loans...I'm still wondering how that's going to help a consumer...it's only for the banks benefit in my opinion but it's going to be interesting what the results are.

Harrison,

Thanks for reading it and stopping by!

Winter,

Some only understood it when they were going to make a lot of money..now they have a hard time accepting that they missed the bandwagon of non reality.

Lyn,

If you put in 150K of imported Italian marble into a home worth lest say 100K...there is no way for it to sell for 250K...depreciation has to set in and you just can't recover the entire amount of renovations...an appraisal will never give a seller that much....unless there is something I don't know...the question is how much value can you give on these types of upgrades.

Randy,

Like I tell them when we sit down....push whatever you want but I can't preform a miracle like that...why wouldn't we want to get them more...they get more and we get more but if they don't think more like an appraiser they might be disappointed.

Ryan,

I know some who's face is pretty red and has hand marks on them.

It doesn't do anyone any good if we take an over priced listing. All we can do is be honest with our clients. I feel very sorry for the people who are upside down on their mortgages, have to sell and in this market absolutely will not be able to get out on that home without a short sale or going into foreclosure.

How funny is it that you knew before it happened. I am still finding that sellers think their property is worth more and want it priced higher or they will go to another agent who will do it. I also see sellers who think they can buy these properties for nothing and make crazy offers and waste everyones time because they will not listen either.

I think we all knew deep down inside that we would be here now 2 years ago. I just keep telling myself month after month for the last 2 years that it is going to get better and it doesn't. :(

Pam,

I always try to be honest and if they can't understand that then I guess they'll give it to someone else.

Norma,

Not before...it was happening then...we just turned a blind eye to it.

Tatyana,

People brushed it off and never thought this would happen.

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