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Now Is Not The Time To Reach For An Unrealistic, High Price

A report from GlobeSt on Florida. “Not everyone but a majority would probably agree that Miami’s condo market is full — even a Brickell headquartered company that has long been known for its successful developments here. Key International Co-President Inigo Adrid tells GlobeSt.com: ‘ The number of condo projects that have delivered in the last few years has resulted in an oversupply of inventory in Miami’s market.'”

The San Francisco Chronicle in California. “Patrick Carlisle started noticing a change late last summer. After what he describes as a ‘furiously competitive market for buyers, perhaps the hottest market since 2000,’ the chief market analyst for Compass began to see a discernible shift throughout the Bay Area as autumn approached.”

“‘Appreciation rates declined or even went slightly negative on a year-over-year basis, price reductions and expired listings soared, overbidding decreased, inventory grew and sales declined,’ he said. ‘However, the magnitude of changes varied enormously by county, and as is often the case in times of transition, market signals were schizophrenic, some negative and some positive.'”

“Even with the mixed signals, Carlisle believes 2019 is unlikely to be as competitive a marketplace as buyers have experienced since the market recovery began in earnest in 2012. The recent slowdown has a lot to do with national trends, like rising interest rates and stock market volatility, as well as local affordability issues, he argued. That being said, he doesn’t expect a market crash either, especially as several big tech companies are likely to IPO in 2019, ‘unleashing a tsunami of new wealth.'”

The McHenry Times in Illinois. “Illinois’ highest-in-the-nation property taxes are eroding home equity and depressing home values across the state. This report is part of a SYHN News Service series on recent home sales that demonstrate the consequences.”

“The home: 3513 Brayberry Lane, Crystal Lake. It includes more than $100,000 in renovations and design upgrades. The purchase: In November 2009, Hsiao Yunlung and Ran Tao paid $430,000 for the home, or $499,376 in today’s dollars. The sale: According to Zillow, the home is currently being listed on a contingency for $385,000, or $114,000 less than the original purchase price, in today’s dollars.”

“Yunlung and Rao originally listed the home for sale at $430,000 in May 2018. The price dropped several times before hitting $395,000 in December 2018. Yunlung and Tao paid $61,019 in property taxes between 2013 and 2017, or 14 percent of the sale price.”

From Thurston Talk in Washington. “It’s no secret that the past few years have been hot ones in the residential real estate market of Thurston County. Homes selling as fast as agents could list them and prices rising dramatically have been the rule for some time, but change is coming. Real estate agent, Casey Jones, has some great ideas for buyers and sellers looking to negotiate the home real estate market as it begins to level out. “

“Patience is the key as the market cools down. ‘Buyers have more choices, so houses are not selling as fast,’ says Jones.  In October, homes priced at market took around 11 days to sell. This is up from eight days in May. ‘It will likely take longer in the next few months,’ Jones adds.”

“Set your list price just below the top prices of competing homes. Now is not the time to reach for an unrealistic, high price. Otherwise, you risk missing ready buyers in your price range. And be flexible on your price. There will be fewer competing offers as more inventory becomes available. Buyers want to feel that they’ve negotiated a price that is a little more reasonable than your asking price.”

“Buyers looking to take advantage of the more reasonable market should also keep some good strategies in mind. Consider including a provision for an additional down payment, in case of low appraisal. ‘This assures the seller that you are strong financially and will not walk away from the purchase if the appraisal happens to come in lower than the agreed upon purchase price,’ advises Jones.”

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This Post Has 32 Comments

  1. ‘Appreciation rates declined or even went slightly negative on a year-over-year basis’

    Somebody break the news to Leslie.

    1. “some great ideas for buyers and sellers looking to negotiate the home real estate market as it begins to level out.”

      Lowering the price? LOLZ

    2. per Zillow I am down 10% from the peak (per Zillow). Still up about 100% from time of purchase and the mortgage is lower than what the next townhouse over is paying in rent (essentially identical unit)

      1. Is this an “investment” of yours? Seems like a good time to sell while your numbers are still profitable.

  2. ‘In October, homes priced at market took around 11 days to sell. This is up from eight days in May’

    Once again, this days on market stuff is meaningless.

    ‘Now is not the time to reach for an unrealistic, high price’

    But six months ago, to the moon Alice! That’s how people go underwater.

    ‘if the appraisal happens to come in lower than the agreed upon purchase price’

    Gurgle…

    1. Actually if there was a flood of supply I could see days on market going down (initially). I would think inventory divided by sales rate (months of supply) would be a better thing to look at.

  3. “Even with the mixed signals, Carlisle believes 2019 is unlikely to be as competitive a marketplace as buyers have experienced since the market recovery began in earnest in 2012. The recent slowdown has a lot to do with national trends, like rising interest rates and stock market volatility, as well as local affordability issues, he argued.”

    Sounds like Carlisle may have missed the memo on the Fed’s Quantitative Tightening program.

  5. ‘This assures the seller that you are strong financially and will not walk away from the purchase if the appraisal happens to come in lower than the agreed upon purchase price,’ advises Jones.”

    So in other words, if it is shown that you are overpaying, you promise to still overpay. Because after all, there’s nothing quite like instant negative equity!

    2. ‘This assures the seller that you are strong financially and will not walk away from the purchase if the appraisal happens to come in lower than the agreed upon purchase price,’ advises Jones.”

      If the appraisal comes in lower than the agreed-on price, I’m going to flee from that deal like Ted Kennedy from a car accident.

  6. “The sale: According to Zillow, the home is currently being listed on a contingency for $385,000, or $114,000 less than the original purchase price, in today’s dollars.”

    FAKE News Alert: Everyone here knows real estate only goes UP!

    1. A friend just sold her house for $685,000. She and her now divorced husband purchased it in 2005 for $760,00. So in 14 years the value dropped $75,000, even more after selling costs. She struggled for YEARS to hang on to that house waiting for the value to recover (the low was $400,000).

      Her relief upon closer of escrow was very evident.

      1. Welcome back Jingle Male!

        Good luck to your friend. Divorce can be hard on the kids and hopefully they got out at near peak price!

  7. I was in Miami this fall, in the Brickell area in fact, and it was the same old story, too many condo buildings with too few lights on at night. Almost as amusing was the Brickell City Centre mall. I went there with the idea of buying some clothing, but I don’t think I could have afforded a single article for sale. I later saw a blog refer to it as “a place for wealthy Brazilians to overpay for superficialities.”

    I hear much more Portuguese being spoken in this state than I used to.

    https://www.forbes.com/sites/kenrapoza/2016/08/03/why-brazilians-are-still-buying-up-miami/#7fa844715acc

  9. That being said, he doesn’t expect a market crash either, especially as several big tech companies are likely to IPO in 2019, ‘unleashing a tsunami of new wealth.’”

    This asshat, like so many others, doesn’t seem to realize there won’t be any “tsunami of new wealth” unless Powell apes Bernanke and Yellen and hits Ctrl-P. Those big tech company IPOs are so 2017 – but now the printing party is over, and the bubble valuations blown up by Yellen Bux are going to come crashing back to earth as Tech Bubble 2.0 implodes just as spectacularly as Housing Bubble 2.0.

    1. now the printing party is over

      Well it should be, but what forces are in play to turn the lights off on that party?

    2. The IPO party is over? In what sandbox is your head buried?
      I can think of a few ready to go: Uber, Lyft, Pinterest……

  10. Buyers want to feel that they’ve negotiated a price that is a little more reasonable than your asking price.”

    Got news for you, Casey: only the weak-minded rely on their “feelings” when making major financial decisions. I, on the other hand, will be relying on the cold hard data and facts, and will not be swayed by stupid realtor tricks designed to appeal to the emotions. And if the house isn’t priced to sell, I’m not wasting my precious time negotiating a price “a little more reasonable” than some greedhead’s wish price. I’m perfectly happy to let those greedheads chase the market down. I’ll have plenty of distress sales and foreclosures to choose from.

  13. “Buyers looking to take advantage of the more reasonable market should also keep some good strategies in mind. Consider including a provision for an additional down payment, in case of low appraisal. ”

    Hahahahahaha! Would I be able to deduct that additional down payment under “Contributions to charities”??!!

    1. I like adding “The broker agrees to chip in up to 100% of the appraisal shortfall from the sales commission!”

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