*Note: This was one of my very first blogs, posted on AR in October of last year. In light of the current market, this advice is right on the money. By the way, the condo that garnered $ 174K when I wrote this article is no longer worth 174K. I just sold one last week for a mere $ 125K. Yes, believe it!
Listing Agents in La-La Land...
Maybe it's because my father had a PhD in Economics, and made statistics and reading patterns rendered by numbers into a game I enjoyed playing as a kid, maybe it's intuitive deduction; whatever the reason, numbers speak to me and always have.
In 2004 and 2005, I understood that supply and demand created unnaturally high pricing on our oceanfront condos, and I was among the first ones to service a long stream of "flippers", as I called them, investors who bought low and sold high. I've made them amazing returns. What a feast that was...
In 2006 I recognized a new pattern I call "the Paralysis" period. During this period, you will find lots of listings and few, or no sales. This paralysis period can last months, or even years, but one thing is certain: immediately following this paralysis period comes "The Big Plummet", sales consummated at unbelievably low prices, prices well below the established comps.
Case in point: take Baywatch for example, a three tower condo project of more than 500 units on the beautiful oceanfront of North Myrtle Beach. Between January 1, 2004 and December 31, 2005, there were 267 units sold at Baywatch. During all of 2006, only 20 sales occurred in the entire project of Baywatch (paralysis period). In 2007 we saw prices on sold one bedroom units plummet from $ 330,000 to $ 174,000. Two bedroom units sold for as high as $ 540,000 in 2005, transacted this year for a mere $ 315,000. Three bedroom units garnering $ 600,000 at the height of the boom, originally offered for sale at $ 650,000, sold this year for $ 375,000.
I see a lot of agents in denial. They are probably in denial about other faucets of their lives as well... I just had one this weekend that gave me a speech about how good the market was, and how correct his seller's home was priced, even though it was listed at 20% above two other comparables that transacted recently.
As agents, we can't create the market, but if we are smart, if we are good agents, we can understand the market and service our clients well by telling them the truth. The truth is: we have over 22,000 active listings in the Myrtle Beach Market. Our third quarter statistics are dismal at best: only 9% of available condos have sold in the past quarter, only 18% of the homes and 5% of the lots available have sold in our area during the past three months. July, August and September are typically red hot months for sales in this Mecca of vacation homes and investment properties. These disheartening figures may signal a more severe trend yet...
What favors are we doing our sellers by telling them what they want to hear? What good does it do to price these listings at 2005 prices? 2005 is gone! 2007 is here, and if you are not smart, 2008 will find you with the same listings you've carried for the past two years. Tell your sellers the truth! Educate them! Stop trying to stroke their egos. They still won't like you if you don't get their properties sold!
Go ahead! Tell them the truth! Lower the prices or risk losing them even more money. 2008 prices will be lower yet. Why wait for the big plummet? Save your Sellers from bigger losses. Price your listings correctly!
I will talk more about my theory on pricing specific properties in future blogs. For now, just grasp the idea and run with it! Your career is in the balance, but most importantly your Sellers' welfare is at stake. Reduce, or Lose!
Myrtle Beach Real Estate by Mirela Monte