We get the blame for our markets getting expensive. How many times have you heard that the Realtors are the reason prices are going up? If those darn Realtors wouldn't suggest such high prices we would be able to afford that house!
I lost out on two listings this week to agents who suggested higher prices than I did. Or maybe they just went along with the Seller in order to get the listing. Our market is very hot in Summit County, Colorado. It is a resort market with primarily vacation homes, the fastest growing segment of the market, according to NAR.
I am pretty conservative when it comes to pricing, and I believe in giving my clients all information on comparable properties and letting them come to a decision with my input. I am an Accredited Seller's Representative with fiduciary duties, so I can't, in good faith, leave money on the table. In a market that is moving up, I look at the active listings (the competition) as well as the solds and I am willing to be a bit aggressive. I also realize that the property has to be able to appraise, and I make sure that the Seller understands that.
My office is in the little town of Frisco, Colorado. It has a very limited inventory, but is central to all ski areas and has a cute downtown area. It has bike paths running throught it and is a place a lot of people want to be. There are many condos and single family homes. One of the listings I didn't get is very unique in that it is a little log cabin built in 1920. It has been renovated and is really delightful inside. It is the kind of thing that everyone wanting a mountain home dreams about but can't find. There is no development potential, so it can't be sold for land value to a developer wanting to scrape it and build multiple units. It cannot even be added on to as there is only 5' of land all the way around it that goes with it. It is possible that the land surrounding it will be developed into multiple units one day. It is 800 square feet with 2 bedrooms and one bath (with a clawfoot tub and a separate shower). It even has a stack washer/dryer. I did my homework and went to the appointment with $499,000 in the back of my head. That is a lot for 800 sq ft, even here! I walked in the door and knew it should be more, because it has very strong emotional appeal, so I mentally upped it to $525,000.
The owner wanted $585,000! I said that I thought $549,000 might be worth a shot, and that I would even be willing to fish a bit at $575,000. They listed with someone else at $589,000. Where do you draw the line in a case like that?
One more example. This home is half a duplex, 2800 sq ft, ON the only river in town, a big draw. The deck is about 5' from it and right now it is high, fast and noisy...in other words, wonderful! Again, I do my homework and find similar properties not on the river selling at between $800,000 and $900,000. Larger properties on the river have sold recently between $1,000,000 and $1,200,000. I take our appreciating market into consideration and say that I would be comfortable with $1,300,000, but he wants $1,500,000! No granite, no stainless steel appliances and it has carpet in the bathrooms. He lists with someone else for $1,487,000. It might be on the market for three months, but I doubt it. Someone will probably shell out the money for it because they want to be on the river so badly. I hope they are a cash buyer as I don't know where an appraiser will find comps for that one! So who gets the blame for high prices? Was the Seller being greedy or realistic? Were the agents better educated than I in knowing what these two properties will sell for, or just willing to go along with the Seller in order to get the listing? I guess time will tell. I will watch to see how quickly they go under contract or have price reductions.
Who do you blame for a market where prices go up so quickly? Or is there any need to place blame at all? When all is said and done, perhaps it is the Buyers that raise the prices.....
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