In Charlotte, where I am a realtor, home sales are up, mortgage rates down, foreclosures are up, home prices have dropped, new construction has all but stopped. Hold on Toto - what’s going on here?
A bit of good news in the sense that the doctor has perhaps finally gotten the fever under control and can now treat the patient’s symptoms. By now, most home sellers have resolved themselves that it takes a lot more to compete in this environment with fewer buyers. Some have taken their home off the market to try again at a later date. Others have renovated and lowered the price. Builders have held off starting new developments.
Buyers want to feel like they got a deal on a home. Some just want to steal a home. Sellers just want to sell, but, many can’t accept the realty of the value adjustments over the past year.
A client of mine desired the instant equity and was able to accommodate the inconveniences of a bank-owned property. We finally found a not too beat-up single family home that originally sold in 2007 for $120,000, and this client was able to purchase it for $93,000. A good deal, in my opinion.
At times I feel a need to point out to some buyers, particularly the ones who want the steal not just the deal, that my client above still had to pay for the home. Not $300 like advertised on the buy-my-dvd-infomercials you see on tv, but, he paid a discounted price off market value. And this home needed some work. Foreclosures are purchased “as is” and that “as is” can come with significant baggage.
More than likely, most home buyers are going to run across a much more common scenario with a frustrated seller. The home has been cleaned, painted, staged, yard mulched and the home has sat on the market looking beautiful, like the Prom Queen with no date. You would think that this frustration would cause sellers to be realistic about values. But, often it doesn’t.
I know of an immaculate white brick home located in a popular subdivision in south Charlotte that went on the market in January 2008 for $650,000, a reasonable price for the area and this home at the time. By late spring 2008, the price was reduced to $599,000 and an offer of $560,000 was rejected flat out as too low to even counter. Today this home is available for a list price of $565,000, and the buyer that made the previous offer has purchased another home. Ouch. But for a future potential buyer, this home is still a deal in the making. Perhaps the sellers have learned their lesson.
This is a common lament for sellers across all price ranges in almost all areas. And buyers have to tread lightly and carefully in making offers. Most sellers have taken a beating on their home values already. Before making an offer buyers should make sure that current comparable sold properties are analyzed for fair market value to be established. For a buyer to offer a significant discount off an already reduced price is not only unrealistic, but, can explain why the seller may come back throwing water balloons.
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