What's the "Real Value" of your home today?

By
Real Estate Agent with Brokered by eXp Realty LLC SL # 3014652

I'm looking at all the properties on the market right now in my area of Weston Florida and I keep wondering when changes will come...not anytime soon. I don't need to keep reading how the media interprets whats going on in the Real Estate market. I already know what's going on. I'm a Realtor®....I better know whats going on or I might as well just get out of the business. I'm primarily a listing agent so my job can be very difficult these days. I remember when taking a listing was easy. You take it and it virtually was sold overnight. It didn't matter what the size was or what the condition was or even where it was located.

Now when I go on listing appointments I'm finding it even harder in some areas to pin point the actual value of the property. I find myself turning down more and more listings because I refuse to waste my time and a sellers time with false promises. CMA's can be difficult to prepare in a neighborhood that hasn't had a few sales let alone one in the last 2 years. I'm even finding myself using a few more pending sales just so I have something to show them that justifies today's value. 

I will start off by only going back over the last 6 months. It makes no sense to go back further but sometimes I'm forced to look back further because I simply can't find anything to support the sellers premise of value. Even going 1year back... you still might not have anything to support your findings and that makes my job even harder. For example...5 years ago I took a listing ....the seller wanted it listed at $239K. At that time I told the seller that according to my figures it was only worth $185K. They refused to "give it a way" and that's their prerogative but it was on the market for almost 3 yrs  and eventually I was able to have the seller re-position it in the market at....but by the time they were really motivated to sell it...it sold for $62K. Now why did this happen?

Here is the problem...this was during the biggest influx of short sales and foreclosed properties flooding the market so now all the other properties in the same neighborhood and the same size and condition were selling for this sellers final sales price. I explained to the seller that now...all the others were becoming their competition. While they refused to see the reality going on...we had only a handful of showings and then they go look at the competition and they see what compares. So what happened? They just wasted almost two years and now the original price point no longer exists. Please note that before I even considered to list that property...it was listed with another agent for 6 months. It turned out to be the sellers relative which was a dis-service to the seller because it was easy for a relative to tell the seller what they wanted to hear...... It's easy to hire a relative but was hard to fire a relative.  Many agents that are hired to list properties will tell the seller anything they want to hear just to take the listing. They do this in order to keep the listing and hope that the seller will re-position the property in the market later. (To define what I just said...it means to get the seller to keep reducing the asking price until the activity increases and you get an offer) Occasionally I have to do this as well. But it's much easier to aggressively price the property within a "price range" and in mot cases the property sells quicker and within the correct price.

So how can you justify today's value? In most places you simply can't. Another example would be when your market is flooded with thousands of homes just in one county the consumer is looking to see how much they can get for their home but it seems they are generally looking at how much the homes in their area are selling for and not what they sold for. Many times I will walk into a listing appointment and before I can pull out any information to justify the value...the seller throws a number at me that is not even close to what I think the homes is worth today. I will usually inquire how they came to that number and I get the same story most of the time. The consumer usually doesn't look at closed sales over the last 3-6 months. They are looking at asking prices but what your asking doesn't tell us what your really going to get. I've seen homes asking $750K that ended up selling in the end for $400K. So how can you justify the first price point if it ends up selling for $350K less? Another problem is you list to sell ratios....if that example above were to sell the ratio would reduce the neighborhoods values even more when the next home goes on the market. The house down the block is not as nice as ours so I think it's worth X. They don't realize that most homes that are sold will require some sort of financing and if it doesn't appraise then they just wasted their time.

It doesn't matter what I think it's worth.....it's what the buyers and sellers are negotiating in today's market place. Even if I say that X is what your value is they still don't realize that this is today but in 30-90 days from now it probably will be worth less in this market so catching up to the market is a bigger problem right now. By the time it hits the market....5 others come on for less or a few might close for less. Right now I'm only looking to get some warm bodies to want to see these properties. If you aren't receiving a call to see it then most likely it's on Pluto. I have properties that I have listed right now at really reasonable market values that aren't getting much activity. These are just a few examples that could be happening .

  • Not many buyers looking in that price range
  • buyers in that price range simply aren't qualified for loans
  • buyers are reluctant to purchase a home with less than 20% down in case they lose even more equity in the home
  • Sellers still can't accept the fact that they most certainly won't get their price no matter what we do.
  • Banks aren't lending money unless strict guidelines are met on these specific properties
  • Too many others that are similar or are bigger for the same price.
  • Buyers are still wating for a better deal
  • Buyers are spending a lot more time looking before pulling the trigger.

Price per square foot just isn't working in my area. If you look back during the Real Estate boom...you'll find that most buyers didn't care about that formula but they still couldn't figure out how two of the same exact homes were selling at such a different spread. So how can you justify it today? You can't.... It was a domino effect. When one house would sell without the contingency of the appraisal then the next house can sell for the same or even more. So every time another home sold for more...the neighbor would try to get even more thus we have ourselves an inflated market....now the same thing is happening in reverse.

How about all those builders who were selling new homes and the price per square foot just didn't make sense. How did all these homes appraise? What about all the speculators who bought a home before it was built only to find out that they can't even sell the home after it closed with the builder because the builder valued it too high and the buyer is stuck with it? Today's value is kind of like the saying...ok so now what have you done for me lately. How many times have your clients called you and asked you you when is the market going to change or whats going to happen to the values. Are they still decreasing or are they increasing or are they going to level off? If I could give everyone the right answer I'd be a millionaire.

 Buyers are more educated these days and should ask their Real Estate agent to show them the closed sales over the last 6 months to support the offer they want to present. This is one of easiest ways for a buyer to determine what is a fair offer and won't insult the seller. They have a better chance of keeping the negotiations and a dialog going. Sellers need to start to think more like an appraiser and also to put themselves in the buyers shoes.

Market correction takes time and there is simply no way to pinpoint the exact time it will take. Remember when people were saying the bubble would burst for 5 years and then it finally did.  So now people ask me when will the bubble grow again?...there is no way to tell how long or even if we will ever see the market we saw 7 years ago.

For the superior service you deserve!


 

For more information ....Please contact Neal Bloom-Realtor® /Keller Williams Properties

 

 Weston Realtor(R) Neal Bloom-copyright 2007

1625 N. Commerce Parkway,Suite 105

Weston FL 33326

(954)608-5556

Neal Bloom tells it Like it is in Real Estate-copyright © 2012-All rights reserved

 

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  1. Gabe Sanders 02/26/2012 07:28 PM
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Rainmaker
594,107
Neal Bloom
Brokered by eXp Realty LLC - Weston, FL
Realtor CRS-Weston FL Real Estate

Terry,

Like I mentioned in the above comments...thankfully Weston is a lot better off than other areas but whats weird is around 8 months ago I sold a home and the seller was hoping for 50K more. At one point they were upset because the showing activity was very low and no offers. So of course I had to ask them to let me adjust it. Whats funny about it is it appraised for almost the exact price it sold for yet the house right next door was much bigger and sold for the exact same price so there goes the price by sq ft theory right out the window.

Kimberly,

I originally sold RE in NY back in the 90's but hear now that the market is still pretty good up there from some of my old buddies. Not sure how CT is but I have a few people on AR that I know live there and say the market is doing much better now.

Jason,

Thanks for the insult..haha...there was a time when I could only go back 90 days because of the quick turnover...now there are times when I'm praying to pull 3 comps to support a sale within 6 months and that's still tough in some cases. Thanks for stopping by like old times.

Feb 22, 2012 07:10 AM #7
Rainer
208,817
Cheryl Thomson REALTOR Army Ret
United Real Estate (703.216.5635) cheryltee47@gmail.com - Prince William, VA
Associate Broker in Northern Virginia

Hi Neal. We hear you loud and clear. I am somewhat lucky to be residing here in Northern VA. However, we have our issues too...I guess all you can do is all you have been doing. Continue to educate folks and don't waste too much time on those who refuse to listen to you even when you give them proof...hang in there.

Feb 22, 2012 07:27 AM #8
Rainmaker
1,561,684
Carla Muss-Jacobs, RETIRED
RETIRED / State License is Inactive - Portland, OR

If the problem is pricing, just think what's going to happen when an offer rolls in . . . It's not easy in the trenches these days.  If sellers are reluctant to believe what you're saying about the price of their home, take them out on tour and show them 5 of the homes in the area that are going to be competiting with their home.  They might see the light that way.

Feb 22, 2012 08:21 AM #10
Ambassador
1,622,599
Florida Tolbert Team Keller Williams Advantage
Keller Williams Advantage III Realty in Lake Nona - Orlando, FL
Keller Williams Land Luxury Division Specialist

Neal,

I have but one piece of advice for you and you will know what I mean by this:  GO BOLD and take IGNITE! 

There are no greater classes out there to address your issues.

I'm blessed to be in Port St Lucie and once again we are HOT.  We too have bidding wars going on and I can't keep a listing for more than a week and I am having no issue with meeting appraisal.

And I know you have the same opportunities I do for training as you can cruise over to Jupiter and take classes.

You are my family member in KW and I hate to see you struggling, but you are Blessed with the greatest training opportunities found anywhere in the Real Estate industry.

Just ask your TL for help. That is what they are there for.  Better yet, call Nikki.  she is never too busy to coach you.

But don't give up.  Reach out to your ALC members.  There is plenty of help within this wonderful family called KELLER WILLIAMS.

Feb 22, 2012 10:03 AM #11
Rainmaker
927,718
Kay Van Kampen
RE/MAX Broker, RE/MAX - Springfield, MO
Realtor®, Springfield Mo Real Estate

Neal, the same problem seems to exist across the country.  Our area is still dropping in value, while some of the higher end homes are beginning to sell after years of sitting on the market.

Feb 22, 2012 10:23 AM #12
Rainmaker
1,317,757
Joan Whitebook
BHG The Masiello Group - Nashua, NH
Consumer Focused Real Estate Services

Neal -- I just had this same discussion with a past client who "wants to sell."  It is a difficult conversation and I don't think is going to go away.

Feb 22, 2012 10:43 AM #13
Rainer
53,328
Susan Shaw
Premiere Plus Realty Co.Marco Island, FL - Marco Island, FL

Hi Neal,

I'm over on the west coast on Marco Island, FL and things are getting much better here.... at last. We are starting to see multiple offers on some properties and for the first time for years I have had to wait to show a property because another agent was showing it and then there was a another waiting in line behind me. Happy days are here.

Feb 22, 2012 11:22 AM #14
Rainmaker
1,550,416
Brian Madigan
RE/MAX West Realty Inc., Brokerage (Toronto) - Toronto, ON
LL.B., Broker

This is very tough to assess in your market with so much inventory on the market.

In Toronto, with no inventory most reasonable products will generate a bidding war.

Feb 22, 2012 11:40 AM #15
Rainmaker
1,081,740
Sharon Alters
Coldwell Banker Vanguard Realty - 904-673-2308 - Fleming Island, FL
Realtor - Homes for Sale Fleming Island FL

Neal, we told a Seller last Fall what their house was worth - and they even did an appraisal to verify what we were saying. But they didnt like what they heard and decided not to put their house on the market. Guess what? It just showed up for sale at least $40,000 over where it should be priced. It will be interesting to watch it...

Sharon

Feb 22, 2012 12:13 PM #16
Ambassador
4,200,236
Jeff Dowler, CRS
eXp Realty of California - Carlsbad, CA
The Southern California Relocation Dude

Neal

It has definitely been a challenge and continues to be in many areas in terms of determining value. And while most sellers these days seem to be well aware of the difficult market and where prices have gone this does not always translate into an objective view of their own home. Having sold my own homes several times in tough markets I know what it's like.

Plus I often find that these days prices can really vary even when there are very similar homes, because of view, location, the specific floor plan and other factors. And then the appraisal may not match what the comps seems to be telling us.

We are seeing alot more activity here in SoCal but the inventory really needs to bump up.

Jeff

Feb 22, 2012 12:14 PM #17
Ambassador
1,705,310
Tammie White, Broker
Franklin Homes Realty LLC - Franklin, TN
Franklin TN Homes for Sale
I'm not even sure how agents can make a living in these circumstances. Or how sellers are managing with sales like this.
Feb 22, 2012 12:46 PM #18
Rainer
125,429
Laurie Clark CRB Angel Realty LLC Your Monument Realtor 719-502-6572
CRB-CCSS-ASD-HBS-RSD-Denver Short Sale Agents - Monument, CO
Angel Realty, LLC

Congrats on the feature! You make some very interesting points. I do think the recovery, when it happens, will be local market by local market. Thanks for sharing and have a great week.

Feb 22, 2012 12:48 PM #19
Rainmaker
4,798,469
Gabe Sanders
Real Estate of Florida specializing in Martin County Residential Homes, Condos and Land Sales - Stuart, FL
Stuart Florida Real Estate

Neal, very well said.  Yes, all to many sellers just don't see the market as is and think the world will love their home enough to pay a premium.  By the time they realize this, they often sell for less than they could have originally received.

Feb 22, 2012 06:29 PM #20
Rainer
387,670
John F Muscarella
RIVER FARM PROPERTIES, LLC - Venice, FL
Broker/Owner, Venice, FL, Florida's Suncoast

You've accurately described our marketplace and the conundrum we face with sellers and buyers everyday.  I see signs of hope but not a healthy market till 2013.  

Feb 22, 2012 06:45 PM #21
Ambassador
1,654,594
Jennifer Fivelsdal
JFIVE Home Realty LLC | 845-758-6842|162 Deer Run Rd Red Hook NY 12571 - Rhinebeck, NY
Mid Hudson Valley real estate connection

 Neal the marketplace is really challenging, we don't have the answers consumers want to hear put we just have to deliver the truth.  Running a CMA is diffult for the reasons you outlined.  At the same time multiple offer situation exist at some price points.

Feb 22, 2012 07:39 PM #22
Ambassador
1,615,410
Harry F. D'Elia III
RentVest - Phoenix, AZ
Investor , Mentor, GRI, Radio, CIPS, REOs, ABR

It is a tough time to sell a home for a profit. I advise sellers not to sell if they do not need to sell. Rent the home out and wait a couple years. It is what it is.

Feb 22, 2012 08:12 PM #23
Rainmaker
594,107
Neal Bloom
Brokered by eXp Realty LLC - Weston, FL
Realtor CRS-Weston FL Real Estate

Thanks for all the comments. All good points and differences in market places. I've read them all and see that most are still experiencing tough markets...thankfully I'm in the business long enough to make adjustments. But until the smoke clears..there are going to be issues on both ends.

Feb 22, 2012 08:30 PM #24
Ambassador
2,064,278
Fernando Herboso - Broker for Maxus Realty Group
Maxus Realty Group - Broker 301-246-0001 - Gaithersburg, MD
301-246-0001 Serving Maryland, DC and Northern VA

I think you have found the real reason of buyers remorse and people waiting to get back into  the market. . under these conditions. . I don't blame them!

Feb 22, 2012 09:07 PM #25
Rainmaker
2,544,066
Richie Alan Naggar
people first...then business Ran Right Realty - Riverside, CA
agent & author

Sellers know what the house is worth (More often than not) and agents have a gut feel...Now to test the market is all that remains...If you take the assessors figure, the rental figure, the cost to build new and just what is coming and going in the neighborhood, awareness just creeps in after a while..Its greed that worries me...

Feb 22, 2012 10:36 PM #26
Rainmaker
810,189
Evelyn Kennedy
Alain Pinel Realtors - Alameda, CA
Alameda, Real Estate, Alameda, CA

Neal:

Some sellers still don't understand that the market has changed radically.  They are living in the pre-2006 days.  If they won't listen to you and they will not lower their price then you need to move on. 

Feb 23, 2012 12:58 AM #27
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