Tuesday, November 8, 2011
Wednesday, November 2, 2011
Where the real estate industry is wrong
You don't need me to tell you that it's simply a tough market to sell a home; especially when you get into the upper pricing tiers. It's a well known fact that many of the properties that are on the market today are just not going to sell; at least not the first time around anyway. There's certainly enough blame to go around as to why this is happening. But I don't think that we need to go very far to find one of the culprits; it's the real estate brokerage industry.
From real estate school to company training to continued education we're taught a very methodical, quantitative, and easily repeatable formula for determining a property's market value. We're conditioned to rely on it, and then we in turn use it to recommend a list price to the home seller. Problem is..............it's wrong!
It's wrong because we're relying on yesterday's data to determine today's market value. What a home sold for 6 months ago, 6 weeks ago, or even 6 days ago has absolutely no bearing on what the next buyer will be willing to pay. So to price a home based on those factors is a losing proposition that more often not leads to overpriced properties that languish on the market, sometimes for years, and often at great expense to the homeowner.
Many of the home sellers that I work with are surprised when I show up for our initial meeting without a list of recent sales. They're surprised because that's what the last agent, who coincidentally failed to sell their home, brought with them. Yet what I bring to the kitchen table is far more important; their competition!
Tuesday, July 19, 2011
sell the large home now...the net effect
Our present economic environment has created a discernible paradigm shift in the psyche of the American populous. The signs are everywhere, that bigger is no longer necessarily better. For example, luxury car brands are now offering compact cars, and many home builders are now rolling out increasingly smaller models.
I feel a bit compelled to write about this trend because I'm presently speaking with a prospective home seller of a large home, and he's considering down-sizing (surprise surprise!), yet this homeowner is hesitant to bring their home to market because my assessment of the property's market value is somewhat lower than his. Could this possibly be you?
If you live in a large home and are thinking about selling it for whatever reason, here are just three reasons why selling now is better than later.
1. The trend amongst affluent buyers is to buy a home that's smaller, smarter, and more energy efficient. Simply put, the demand for large homes is decreasing, and so are the selling prices.
2. Jumbo Loans are becoming scarcer and harder to qualify for. Coincidentally speaking, the FHA loan limit for Jumbos has been reduced in many areas. So even if the buyer pool for larger homes is still be ready and willing, will they be able to buy?
3. Reason #3 is in my opinion the most compelling. Presently, in Miami-Dade County the months of inventory of homes under 3000 sq. ft. is 7.1, while the months on inventory of homes over 3000 sq.ft. is 12.3 months! The effect of this difference in months of inventory is that your large home will continue to depreciate for a longer period of time than the the smaller one that you'd like to buy. To mitigate this situation, consider selling your large home now, and you'll be much more likely to have more money to take with you towards the smaller home home because you will be both selling and buying in the same market cycle. The possible peril of waiting to sell is that one runs the very real risk of selling on the downside of the market cycle while then buying on the appreciating side. So instead of having $10.00 to apply towards your next home, you could conceivably end up with only $7.00.
So if you don't want to miss out on those three bucks, sell the large home now!