Market Price or Wish Price?

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

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

 Remax Real Estate Weston Florida                                                                                        Weston Realtor(R) Neal Bloom-copyright 2007

2500 Weston Road ,Suite 103

Weston FL 33331

(954)608-5556

Neal Bloom-CRS copyright 2008

 

The Real Deal tells it Like it is in Real Estatecopyright © 2008-All rights reserved

 

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Neal Bloom

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Re-Blogged 1 time:

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  1. Steve Homer 10/02/2008 12:25 AM
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Rainmaker
325,921
Esko Kiuru
Bethesda, MD

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.

Oct 02, 2008 12:32 PM #48
Rainmaker
655,982
Bob & Carolin Benjamin
Benjamin Realty LLC - Gold Canyon, AZ
East Phoenix Arizona Homes

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

Oct 02, 2008 01:31 PM #49
Anonymous
Craig Davidenko

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 

Oct 02, 2008 02:35 PM #50
Ambassador
448,173
Deb Brooks
Brooks Prime Properties Wichita Falls Texas - Wichita Falls, TX

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 02, 2008 02:42 PM #51
Rainmaker
453,716
Allison Stewart
St.Cloud Homes - Saint Cloud, FL
St. Cloud Fl Realtor, Osceola County Real Estate 407-616-9904

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.

Oct 02, 2008 10:25 PM #52
Rainmaker
594,107
Neal Bloom
Brokered by eXp Realty LLC - Weston, FL
Realtor CRS-Weston FL Real Estate

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.

Oct 02, 2008 11:37 PM #53
Rainmaker
250,018
Mike Klijanowicz
Cummings & Co. Realtors - Perry Hall, MD
Associate Broker @ Cummings & Co. Realtors

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

Oct 03, 2008 12:56 AM #54
Ambassador
1,495,394
Jim Crawford
Maximum One Executive REALTORS® - Atlanta, GA
Jim Crawford Atlanta Best Listing Agents & REALTOR

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.

Oct 03, 2008 01:28 AM #55
Rainer
63,280
Sonja Adams
Samson Proprties - Purcellville, VA

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

Oct 03, 2008 02:04 AM #56
Anonymous
Peter Fyler (SplitRock Real Estate, LLC)

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)

Oct 03, 2008 02:36 AM #57
Rainmaker
519,175
Harrison K. Long
HomeSmart, Evergreen Realty - Irvine, CA
REALTOR , GRI, Broker associate, Attorney

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

Oct 03, 2008 02:47 AM #58
Rainmaker
83,424
Winter Baserva
Seasons Realty Group of PalmerHouse Properties - Atlanta, GA
Realtor -Homes For Sale, Atlanta, GA

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.

Oct 03, 2008 04:16 AM #59
Rainmaker
1,601,114
Lyn Sims
RE/MAX Suburban - Schaumburg, IL
Schaumburg Real Estate

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.

Oct 03, 2008 04:28 AM #60
Rainmaker
662,741
Randy Prothero
eXp Realty - Mililani, HI
Hawaii REALTOR, (808) 384-5645

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

Oct 03, 2008 04:38 AM #61
Rainmaker
307,533
Ryan Hukill - Edmond
ShowMeOKC Real Estate Pros of KW Elite - Edmond, OK
Realtor, Team Lead

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 03, 2008 04:56 AM #62
Rainmaker
594,107
Neal Bloom
Brokered by eXp Realty LLC - Weston, FL
Realtor CRS-Weston FL Real Estate

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.

Oct 04, 2008 01:00 AM #63
Ambassador
535,077
Pam Dent
Gayle Harvey Real Estate, Inc. - Charlottesville, VA
REALTOR® - Charlottesville Virginia Homes / Horse

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. 

Oct 04, 2008 02:13 AM #64
Rainer
22,296
Norma Crouse
HER Realtors - Pataskala, OH
Norma Crouse

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.

Oct 04, 2008 07:47 AM #65
Rainer
57,693
Tatyana Sturm
Exit Realty DTC - Aurora, CO
Denver Realtor, GRI, Denver/ Aurora CO Relocation

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. :(

Oct 04, 2008 11:38 AM #66
Rainmaker
594,107
Neal Bloom
Brokered by eXp Realty LLC - Weston, FL
Realtor CRS-Weston FL Real Estate

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.

Oct 04, 2008 01:17 PM #67
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Rainmaker
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