I had a candid conversation with one of our buyers the other day. She is looking for a $40,000 house in a nice area that doesn’t need anything other than cosmetic repairs. Without really thinking, I told her that we had plenty of $40,000 houses that met her criteria but that they cost $80,000!
And while that seemed a bit specious at first, there is an underlying truth to the statement. The intrinsic value of real estate is absolutely determined by location and condition.
The demand for properties in good areas that are move-in ready is very high in our area, and that is reflected in the sale prices of these homes. We have seen some sell as high as 60% OVER list price.
We are still looking for that compromise rare gem that we might uncover, but we are also adjusting our search criteria to a more realistic level of expectation.
And working together, armed with knowledge and an accurate assessment of the market, we will find just the right house for her!
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What common sense? Hmm, I wil give that some more thought :)
Richard....I haven't seen any "give away" homes in my area.....prices came down last year, but seem to be stabilizing now....our new contruction is increasing in price....we jump prices $5k after every 6 or 7 sales.....we've gone from $299,900 to $339,900 in one subdivision within a year....they were selling at $389,900 before the mess!!!
Richard - Great point about having plenty of $40,000 homes that cost $80,000. Some customers view on how far the market values have dropped and what is realistic is just not an accurate view. It just goes to show that real estate trends are tied to local economic conditions and demand. I read a blog earlier this morning where what was once a $250,000 home in Florida was selling for $92,000. In our local market the average home sales price hasn't adjusted by 20%
Richard,
Yes. Buyers too often use the generalities of the national news to obscure the facts at their local level.
Richard,
I always jokingly tell buyers that if those homes existed, "don't you think Realtors would be buying them up?" They get the implied message.
Rich
I think many buyers are suffering from "sticker shock". They believe what they see on the news so they expect to get everything they want at very unrealistic prices.
It's the age old conundrum. Buyers want the castle of their dreams for nothing. Sellers selling the old home in need of updating for the price of a castle.
I could sell 2 bedroom 2 bath directly on the beach for $150,000 all day long. Unfortunately we do not have them. Prices have come down a lot but like you said location and condition. Buyers "hear" a lot from friends and TV and they are disappointed when you CAN"T buy for 10 cents on the dollar.
"move-in ready"....
I have to call you about my "Certified, Move-In-Ready" inspection and marketing program!
I think the market is ready and I would love to hear your thoughts.
I hear this too. Sometimes the expectations are just unrealistic.
We tell them that, but also let them know we will set up a search and when they see something that pops we need to get right out there.
Patience is the name of the game when this occurs.
I think that there are those living in a dream world when it comes to real estate. I think that Richard I. has a pretty good answer too.
Setting realistic expectations can be a challenge as the media keeps building up the foreclosure opportunities and short sales!
Well, at least she has come around and with a little patience, and ability to jump when the time is right, you will get her there.
Funny how expectations are tied to the national media positions. We have been countering those positions for years and I expect we will continue to do so.
Richard: Price isn't everything, is it? The too good to be true deals are exactly that. By the time you fix up a "good deal" you should have paid extra, saved yourself the time and effort, and bought the move-in ready one.
DON'T YOU JUST LOVE IT. . .
When a prospective home buyers says, this is what I want and this is where I want it and THIS is what I want to pay for it.
I like to call it the "WHAT, WHERE, HOW MUCH" search.
Sadly, real estate is "How much, Where and What".
Your opening line about there being plenty of $40,000 houses that met her criteria but that they cost $80,000! is so good, that if you don't have a patent on it, I would like to use it for unrealistic buyers.
Yet another great post Richard.
Realistic expectations. That is wha twe need to instill in our clients. WE have talked about this for years!
There are sooo many unrealistic buyers out there watching too many seminars on home buying that think they can get the deal of the century and it's just waiting for them. There are so many "buts" that come along with buying a home like this. It's a good thing we are here to educate them!
It does take time and patience to educate our customers and clients. Hopefully, they appreciate what they are getting from a true professional.
Throw any analogy at them and let them know there are 2007 Cadillac Cars for sale too for $100 in cyberspace. The infomercials have poisoned the lot. And the mindless beat the drum. Got any frees's ? GO Fish
Hi Guy...
Thanks for all of the great comments. We moved the office today, so I haven't had much time for commenting. i should be back on track tomorrow!
I love it, Richard. All my buyers are looking for bargains in good areas. And when a well-priced house comes up, guess what, so do the 30 other buyers looking for the same thing. One day it has to sink in. Either change location or up your price.
Everyone wants that amazing deal, but they have to understand that the market dictates how good a deal you can get.
Richard, I couldn't have said it better. With all the news and hype out there, it behoove all of us to set the stage with our customers to adjust their expectations to the level of reality as it exists in our individual markets.
Richard,
Great post but the buyer is now with the right agent who is doing the right educating anf setting proper expectations..you will find her something soon.
Hi Richard, the only good deals buyers see around here are short sales and foreclosures. You clients are lucky to have you because you will find the something. Oh, the pressure! :)
Richard,
I hope the move in to the new office is going well. I see lots of $40,000 houses - just not move in ready. I did sell a very nice attached 3/2 ranch townhome early last year for $49,000. It needed carpet and paint but could have been moved in to just like it was. The cosmetics weren't terrible, it just made sense to do the work before move in.
Richard in our area, we have the buyers looking for the $250,000 home with the $150,000 pre-qual. Getting them to understand walk before running is key.
Richard:
Being an artist I am sure you know that realism is sometimes difficult to capture. That buyer may be dealing more with impressionism or, perhaps, even surrealism in her expectations.