Profile picture for tcp100

Sellers in this market - out of touch?

My wife and I have been looking in this so called "buyer's market" for a month now. There are a lot of properties on the market - and a lot of them have been on the market for 4, 6, 8 months - even almost a year.

However, with the last 3-4 properties we've made offers on, the seller is barely willing to budge from their list price - despite comps showing the neighborhood is selling for significantly less..

I guess that's another part of the problem; a good part of the comps we often find from our Realtor are from almost a year ago - and this area has had the biggest drop in the past six months.

Part of me wonders if we're expecting too much, but on the other hand, if a house has been on the market for 120+ days, wouldn't that signify that the house is not priced right?

We've been coming in at about 5% under list with our starting offers (in the 275k-300k range), but sellers invariably come back with a counter of $5k off list and won't budge.  We even had one seller stay firm, and they've been on the market for 220 days!

Another house was asking 299, but the comps showed all but one house (which was 300 sq ft larger and sold in December for 306k) in the 260-275 range. We offered 285.  He wouldn't budge... Even though the seller's agent (weird) told us he has lost his job and is moving out of state!  I know the problem though - he bought the place for $330+ in 2005.  I don't see how that should affect me, though.

We're well qualified, have nothing to sell, don't put any extra contingencies in our offer, and are not trying to lowball at like 10% under the asking price..  Is the "buyer's market", at least in Richmond VA, a myth?

It certainly doesn't seem like it should be.  Zillow shows 12,000 properties for sale in the West End / Chesterfield areas alone.  What's the disconnect???
  • April 16 2009 - Richmond
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Answers (24)

Profile picture for Ken Kopper
TCP, I don't think you are being completely unrealistic in your approach. You are trying to purchase a home for best price possible and sellers are trying to sell it for the best price possible. Hard to believe the property where the guy lost his job and has to move out of state didnt fall to you though. You would think that traditional sellers (not short sales or foreclosures) would jump at an offer within 5% of their lisitng price especially after 4 months or more on the market.

Hang in there, stay positive and the house you were meant to own will fall in your lap as there is an abundance of inventory on the market and more coming!
  • April 16 2009
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Profile picture for coffeejolts
Have you considered the possibility that some sellers aren't reducing their prices because they cannot financially afford to do so? You say that comps are selling for significantly less. I suggest you buy one of the comps.
  • April 16 2009
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Profile picture for wetdawgs
It is quite possible that your offers are putting sellers into the position that they will have to "short sell".    If that is the case, then they need approval from the bank and there are many more hoops to jump through.

How does that affect you?   They can't accept your offer without going to their bank (and the consequence may be weeks or months before you hear back).

It is also possible you have been unlucky.   Houses have been selling, and houses are selling under their asking prices in most communities.


  • April 16 2009
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Profile picture for tcp100
Coffejolts: I understand, but if a house isn't selling for months, there's a point where it makes sense to sell at a reduced price, instead of just paying the morgage every month.

I've always thought something is only worth what someone's willing to pay for it.  What bugs me is I wouldn't be shocked if I see this guy's house reduced to my offer in two months, which means he's out two more months of a mortgage at the same price I would have given him.  It doesn't seem rational.

It's not like I'm asking for 1/4 off the asking price.  I'm coming in within 5%.  I've offered a quick closing timeframe with no contingencies.

I understand people don't like taking a loss.  The "short sale" issue that wetdawgs mentioned makes more sense to me; it may not be possible for them to make the sale.

I put another offer in at 275 today on a property asking 285. The comps say it's worth 270. They paid 310 for the house in '06.  I feel like I should be able to get a "better deal", but I'm honestly tired of haggling and I do like the house.   If this one falls through, something's out of whack. I just didn't think it'd be this tough.

I just get the feeling that lots of folks who paid way too much for a house and now need to sell are having a real hard time. I feel for them -- but I think they're being unrealistic.  I was this close to just throwing my down payment in a CD last night and coming back next year.  The declining market is not the fault of first time buyers like me -- but it seems like a lot of folks feel that way.

My Realtor has been a great help, and maybe I'm just not used to how this whole process works. I have found it all to be very tenuous, adversarial, and totally arbitrary in many ways.
  • April 16 2009
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Profile picture for Space_Truss
Some markets or sellers resist too long to realize the situation. Everybody is looking at the listing prices around them, not sale prices.

If you offer what they are asking, and need to sell the house in close future, you will be the one waiting for months. I know many firm sellers who reduced the prices 20-30% to be able to sell, after waiting a year on the market (Ann Arundel County, Maryland)
  • April 16 2009
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Profile picture for tcp100
I'm planning on staying put at least 3-4 years.  Even with that, I'm pretty much prepared to sell at where I bought; I am not trying to flip or make a quick buck.  I am just sick of renting for numerous reasons, and if I can build some equity in the very least, I'll be happy.

Even in a market like this, how much can I rely on the appraisal to protect me?  My understanding is that appraisals usually come in higher than the local market will actually bear.  Is that true, and if so, why is it so?  Is it because many appraisers don't account for "distressed" properties in the vicinity?
  • April 16 2009
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Tc hang in ... you will find a home and will get it for what you feel the market value is worth... don't settle... a home is to emotional, it is where you renew after a hard day at the job...

you made a comment on the appraisal coming in 'over' market value... keep in mind there is no way to a have a pat matrix on how values are arrived... if you send out 2 appraisers you get 2 values.. send out 4 and you will get 4 values...

they will not usually show a value higher than your offer price... but may come in lower than your offer price, at which point either the bank or seller and you will have to decide if the deal is off or someone moves the sales price down or you find more money to bring inthe differnce... yes that is an option...

have your agents do numbers, keep you bottom line in mind and know that the right property will present itself at the right time...
  • April 16 2009
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Profile picture for coffeejolts
tcp, if I was you, I would wait. Yeah, renting sucks, but so does owning a home. You're only looking at 3-4 years. Most experts predict this is going to be a U shaped housing slump, and acknowledge that we have not yet arrived at the bottom of the U. Likely, you'll be selling for less than you purchase at. You'll have to make a least 10% on the house just to break even at closing, when you figure in the closing costs (that the seller almost always pays) and the realtor fees.

There are two advantages to home ownership:
#1: Your payment stays the same while wages go up.
#2: The tax deduction.
Neither really applies when you are only looking at 3-4 years. In a good market, I think you have to own a home for at least 7 years before you see an advantage. Anything less, and you are better off renting. In a bad market like this one, I think you'd have to stay 10 years.

Put your money in savings and find a better landlord. You'll be glad you did.
  • April 16 2009
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Profile picture for tcp100
Ok, I hear you, but as a first time buyer, I think I should consider this $8,000 tax credit this year. That's 3% right there. And the fact that right now mortgages are at about 4.9% -- and CDs and savings are making squat.

To boot, my rent has been going up consistently about 7-8% a year, and thats across multiple landlords.

I do think there are advantages to homeownership beyond the financial ones too --  I value privacy a LOT, and I just don't get it through renting. 

I travel a lot (50% of the year) for work, so I really need a place to insulate myself from the world when I come home. An apartment just doesn't do that.  So, to me, that's worth something.

I guess I just expected an easier time negotiating and more of a "deal".  The media kinda painted that picture even before I jumped in. 
  • April 16 2009
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Profile picture for jal74
TCP

Prices could easily fall more than 10% just this coming 12 months.  That would easily destroy your 3% credit.  In addition, given that there are transaction costs to exit a house, i really suggest you continue renting for another year and revisit

Regards
  • April 17 2009
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Profile picture for mayzebra
We are experiencing a similar scenario in OK.  Nothing but nothing sold for about 5 months, but now it seems people are moving from hard hit areas to "recession proof" places places like OK, TX, VA.  Of course, we aren't recession proof, but sellers are hoping to get their investment back before reality sets in. 

This was good for me because I could sell my home for the asking price, but I was hoping to buy one outright with cash.  Houses have been getting MULTIPLE offers first week on the market since February. 

People are losing their jobs and trying to sell, and investors are still buying to flip, but make no mistake... It's just a matter of time before this gets back to a true buyers market.  About this recent sellers market, realtors are saying, "Take advantage of it now, because it won't last."  I'm thinking as soon as this summer we'll be back to bargains. :)
  • April 17 2009
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Profile picture for CORONA NICK
1 month of looking is hardly long enough to find a good deal... keep looking, you will know when a deal falls on your lap...
  • April 17 2009
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Profile picture for dacolan
tcp100,

Have you considered renting a house? Holding just 3 or 4 years given the current market could easily result in a substantial loss (depreciation, closing costs, agent commission, etc.)

With rents falling and vacancies rising nationwide, I can't understand how your landlord justifies a 7-8% increase.
  • April 17 2009
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Profile picture for rjon.101
I have experianced and gone threw this similar frustration in buying RE in the last year.  Here is what I learned. Welcome to market based reality of willing buyer willing seller. All the reasons a buyer won't sell at the price you will pay are irrelavant to you (or should be irrelavant to you). It is best to not waste your time/energy and move on to find a house the seller will sell for at the price you will pay. There are many reasons mentioned already as to why a seller wont make the choice to sell;    money owed on the house being the only non emotional reason) and the emotional reasons for not accepting what the market value is can not be dealt with by anyone even the best negotiating REA, the seller just has to come to grips with the reality of the situation. It is exactly the same as any loss,  there are the stages of grieving and one of them is denial and one is acceptance. Losing a lot of money is loosing a dream or security, or hope for the future and is an emotional loss just like the loss of a love or a loved one..It takes time to heal and accept. I know a house I want to buy where the owneres have tried to sell for peak 2006 price for 3 years now, They keep hopeing for that wealthy white knight to come along and are hoping to beat the odds that the market comps say their house will sell for 1/3 of their asking price. And if they do not have to sell they don't.  
A way to save time/energy is to find out what is owed on a house, or what the sum of all liens on a house are and omitt looking at any that have more owed than you are willing to pay, unless you want to deal with a foreclosure situation in which case the bank will decide an unemotional price to sell at. and unless you are paying cash there is no downside to waiting a year or 2 or 3. (my opinion) as the owners adjust to reality or get to where they have to sell.
  • April 18 2009
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I think that in this market you can judge home by days on the market anymore. Just because the home has been on the market for a long time does not always mean it is overpriced. You have to also keep in mind that the banks are not lending money right now. So not too many buyers are in the market to buy. Which creates a high inventory with low demand.
To your rejected offers: I don't think there really is much explaination besides what you have already said yourself. Some sellers still try to hold on to what is probably their life investment.
What I can think of.....if the homes have been regular sales and not short sales.....in the short sale process the owner has to agree to put the home on the market for a certain amount of time. Then proof that he has not received any accepable offers during this period to be able to declare a short sale.
If it was a regular sale the owner would still have to come up with the difference at closing. Most sellers don't have this extra money.
  • April 30 2009
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Profile picture for jamulhern
In the Northern Virginia area we are actually in a sellers market right now.  Every home on the market that is priced within reason is under contract, and the last two lisitngs we placed on the market (April 20th and May 1st) sold by their first weekend on the market with one going for $5k over list price - and it was the highest priced home in the neighborhood.  All of our buyers are facing multiple contracts on the homes they are interested in, and one of our clients went up against 17 contracts...Sorry buyers, but for the time being the market of a year ago is gone and you are not in control.  They say prices have dropped 17% in our area, but the homes we are going after are selling at or above where they were a year ago.
  • May 05 2009
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Profile picture for daveyjones2007
Jimmy, I am not doubting you, just beware that REA anecdotes about multiple bids have worn pretty thin here and everywhere.  If you have a link to some comprehensive stats in your area, it will go a lot further in proving your case.
  • May 05 2009
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Profile picture for jamulhern
I can understand that - I was sick and tired of hearing all the agents in our area saying the bust was over a year ago....I am not posting in here to get business so I am not really worried whether people believe me or not.  I like these forums as a way of sharing ideas and hearing what people are thinking about the market...Not sure what I could post outside of actual remarks of listings to prove that multiple contracts were received on a home.  Don't forget that if 4 contracts are placed on a home, 2 of them are going to be low ball deals - I am not hinting that prices are escalating. 

Not sure if this will post, but here are the stats for Fairfax County for all homes listed March 1st, 2009 or later - this data is from our MLS, and basically says that 4,200 homes were listed, 2,000 are sold or under contract, and the average days on market is 20 days for all of them, and about 15 days for the ones that are sold or under contract.

Active Listings - 2,198 Avg. Days On Market - 26

Under Contract - 1,677 Avg. Days On Market - 15

Sold - 373 Avg. Days On Markt - 9

The only way I knew how to link it was through my website and I did not want to do that.  I have to think that the numbers released yesterday that sent the stock market up 200 points reinforce what I am saying, and those numbers are months old.  That's the advantage to having an agent who is actually doing business, we see the trends everyday before the news sources start reporting on them.  Seeing numbers is one thing...writing contracts and being told someone elses offer is better is another.  I do understand the cynical view point though - I am appalled that some treat our business like a used car lot.

  • May 05 2009
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Profile picture for klarek the realist
Don't let greedy sellers bully you into paying a bubbled price for their house.  Teach them a lesson and reject their "counter" offer, and let them sit on that for a while.
  • May 05 2009
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Profile picture for lynrosect
I have been searching for a house since June 2008.  I've watched listed houses in Connecticut start in the mid 400's and drop to the high 200's.  I agree with the OP.  Sellers in this market are out of touch.  I have no idea why a seller in this market would think they can list their 1300 sqft, 3 bed/1 bath, small lot home for 350K.  It's just not going to get sold.  I've made very good offers on homes that were rejected.  I even watched a home I made a decent offer on go into foreclosure 6 months later.  It's crazy.  Seller's are just out of touch.  All I know is that I will not purchase a house at inflated prices just because the seller thinks the house is still worth what it was two years ago.  I negotiated a sweet month-to-month lease and I will just stay until I find the right house at the right REASONABLE price.
  • May 05 2009
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I live in a cookie cutter neighborhood. My floorplan has 4 houses listed ranging from $155K - $200K - identical lot size and house. The $200K is a FSBO and 2 are REOS at $155K&$158K and one is a straight sale at $185K. Go figure. The one at $185K has DOM of 300+ and you wonder why they bother. Interestingly, the FSBO has been empty.
  • May 05 2009
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Profile picture for jamulhern
There is no excuse for sellers who think their home is worth what it was two years ago.  The people who have their home priced right AND have taken care of their homes are selling them rather quickly...just sit back and relax if you are looking though.  I think we are about to see a rush in REO properties hit the market here soon.
  • May 05 2009
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Profile picture for sunnyview
I agree with you. It will be interesting to see what comes on the market in the next 30-90 days. 
  • May 05 2009
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In my area (Central FL) what I have observed over the last 2 years is that sellers were initially in denial (not surprising given that houses doubled over the course of about 3 years here).  As time went on and more and more houses when into foreclosure, sellers started to agressively drop their prices, but they could not keep up with the downward momentum.  Now, it seems that sellers "know" that they are in trouble.  About half simply want to sell for what they can get or what will keep them from short sale territory.  The other half have embraced the fact that they must short sell or foreclose.
  • May 05 2009
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