The Market is Changing....Who is Ready?

Real Estate Agent with Keller Williams Realty Central Delaware



   Have you received the bad news yet...the market is changing.  I recently sold a home that I believe according to the comparables that was adequately priced.  I pulled up the comps (like we all do) and agreed with the sellers on a reasonable price as I thought that there would be plenty of wiggle room for this buyers market that we are in.  We got an offer relatively quickly with seller ready to pay the market price and my clients were excited. But then the dreaded appraisal came in 10K below market value.  We were stunned...the closest house was 200 sq ft smaller than ours..we had all the upgrades in this house.  It was without a doubt the superior product in its class.  The kicker was the market is changing and prices on homes are coming down.


   Who is ready for the changing climate?  Is there a chance for a homeseller in this market.  Suggestions and comment are greatly appreciated

Comments (7)

Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Mason:  To me, one thing sticks way out in your story.  The words "we had all the upgrades in this house."  Unless upgrades add physical floor space... unless these upgrades are increasing the square footage of the home... they may be worth perhaps 20% to 35% of what their original cost was... if that.  And, I may be being overly generous with those figures.

That is why when I sell a new home, I really try and talk my buyers into holding off as much as possible on adding a ton of upgrades to their new home.  In general, they just will not get their money back from the upgrades... when they sell.  The market is not "changing."  The change has already taken place.

Feb 27, 2008 04:30 PM
Mirela Monte
Buyers' Choice Realty - North Myrtle Beach, SC
Myrtle Beach Real Estate

This just goes to show: you really need to communicate with the appraisers ahead of time... 

I'm very careful about who does the job.  I pick their brains ahead of time, so I can get a feel for their point of view about the value before the perform the appraisal.  Worth every second spent on it!

Feb 27, 2008 04:39 PM
Ruthmarie Hicks
Keller Williams NY Realty - 120 Bloomingdale Road #101, White Plains NY 10605 - White Plains, NY
I don't know Karen Anne,  Around here upgrades partiuclarly  granite countertops  - wood cabinets etc.  seem to make the house worth more than the sum of their parts.  But that might be a NY thing.  If people upgrade the house, make sure the floors are done etc and create a true move-in ready situation for buyers - most buyers will pay top dollar.  It might have to do with frantic pace that people keep in the "Big Apple."  No one has much time for anything - let alone upgrades and renovations.  People want to drop their bags and go straight to the office and don't want to do one lick of work on their home. I've had people reject a home based on paint color for God's sake.  So I think it depends on where you are. 
Feb 27, 2008 04:59 PM
Michael Creel
InActive Agent - Bellevue, WA

Market changes so much these days, comps are almost useless. Especially this time of year when your comps are pulled from the harsh winter months and the worst period of the mortgage crises, when lenders were locking doors and deals were collapsing.  

Feb 27, 2008 05:06 PM
Karen Anne Stone
New Home Hunters of Fort Worth and Tarrant County - Fort Worth, TX
Fort Worth Real Estate

Ruthmarie:  I very much understand about people in the Apple wanting to drop their bags and go.  Real Estate, and that probably includes "upgrades"... is local.  What adds lots of value in one area, may add half that amount in another.  I guess also I may have related the story to the old adage that having the "nicest house on the street" is not always totally a good thing.  In some areas I might guess that some upgrades may help a home sell more quickly, but may not add much to the value.  The best answer to will it or won't it... usually is... "it depends."  Take care.

Feb 27, 2008 05:15 PM
Jon Zolsky, Daytona Beach, FL
Daytona Condo Realty, 386-405-4408 - Daytona Beach, FL
Buy Daytona condos for heavenly good prices

It is sort of suprising to me. Working with teh buyers we pick several homes in the Buyers price range. Yes, the house with upgrades has a better chance at being sold first, but ... not at a higher price.

Feb 27, 2008 05:26 PM
Dan Grammar
Realty Executives, Tucson Elite - Oro Valley, AZ
Professional Realtor - Tucson Arizona Real Estate

Well, we have seen blanket margins of 5% for "declining markets" for many appraisals in certain zip codes in Arizona. This too will pass! :)

Keep fighting the good fight!

Feb 27, 2008 05:55 PM