Archive for the 'Sellers' Category
Calling All Alpharetta HOA Presidents | Sharing Information About Your Neighborhood is a Great Way to Boost Home Values
categories: Alpharetta Real Estate, Sellers
Over the last few years I’ve received a number of phone calls from residents of Milton and Alpharetta neighborhoods asking my opinion, as a realtor, about how they can increase their home values. Usually these calls are from older neighborhoods where the price of their homes was relatively lower than some of the newer neighborhoods. However, the owners in the older ‘hoods think that their homes are not THAT much less desirable than the new homes.
The problem stems from the fact that raw land appreciated so quickly in north Fulton County, and particularly in Milton, where it is said to have quadrupled in a few short years prior to our current "market correction."
This created a price gap between the "original neighborhoods" and the new neighborhoods. The original residents want to bridge that gap, but how?
Some of the neighborhoods like Brierfield near Crabapple have redone the entrance to the neighborhood with stacked stone signage and have replaced all the mailboxes and sign posts to given an updated look.
That’s great, although, I don’t think that you can say the houses in Brierfield are worth $2000 more today than they were last year because of this. Here’s my suggestion: Promote the benefits of living in your neighborhood.
By that I mean: market yourselves. A neighborhood should have a unique selling proposition, just as a house should. For instance, the neighborhood has one of the few swim teams around, or the best ALTA tennis program, or multiple lake lots with community access to the lake for fishing, or well-organized kids events like Halloween and Easter egg hunts, or horse trails, or proximity to a park or even a Starbucks or lawn maintenance included in the HOA dues.
For the longest time, I’ve been trying to get my neighborhood to build an artificial putting green (don’t forget the sand bunker) next to our pool. How about that for a unique selling proposition? How do you think the conversation would go when a prospective buyer drove into the neighborhood? Man speaking to wife: Look honey, they have a putting green. I love this neighborhood already.
The HOA should have an External Communication function/person whose job it is to spread the unique selling proposition. If your neighborhood does not have an external website, build one. Get a neighborhood kid to spend a little time optimizing it for the search engines…he or she will know what to do.
Publish your community calendar, tennis matches, swim lessons, etc. Take lots of pictures of different times of year and post those. Calculate the number and age of the children and publish that because every mother I’ve ever worked with wants to know if there are kids her kids’ age to play with and the only place this information exists is with the existing homeowners.
Ultimate goal: make your neighborhood desirable. Market it. Make someone in Iowa reading about your blooming azaleas in April drool to live in your neighborhood. Let them know what kind of people live in your neighborhood and that you all aren’t a bunch of raving lunatics!
A good time and place to start could even be right here and now. Leave a comment to this post and tell us what neighborhood you live in and why it is a great place. Go ahead…sell me on it. Leave the url for you neighborhood website if you have one.
In the end, the value of your home is based on the comparable sales in your neighborhood. If you can make your neighborhood the envy of the area and get people wanting it instead of just "taking a look," you’ll be more likely to get some solid sales at closer to list price and develop some price momentum.
Of course, you all need to be keeping you homes maintained and updated, particularly the kitchens, but marketing the neighborhood as only residents can do won’t cost you a dime, just a little time. Go ahead, start today!
Posted by Kevin Warmath | Currently 1 Comment »
Sales Price Up, Number of Sales Down | Real Estate Market Trend Remains the Same in North Fulton and Alpharetta
categories: Alpharetta Real Estate, Local Market Conditions, Sellers
I received a phone call from a local newspaper yesterday asking for some real estate market analysis. It seems that word has gotten out that I like to crunch the numbers.
Someone had forwarded the reporter a link to an article on CNN Money that listed Atlanta (and mentioned Alpharetta) as one of the six best places to buy a home based on prices expected to rise the most - or decrease the least - in the next 12 months.
How seriously should you take a list like this when Detroit (Farmington Hills) is on the list with you? Isn’t the housing market in Detroit a train wreck? Maybe the wreck has already happened and now they are just cleaning up. After all, Ford did announce today a $100M of net income in Q1, a $382M increase over Q1 last year.
The CNN Money analysis was done by looking at the Metropolitan Home Price Index published by OHFEO and the "fundamental housing value," a measure also called the price-rent ratio which is derived by taking the price of a home and dividing it by the discounted value of the future stream of rent payments you could get for that house. This is an investment based valuation method that says anything over 1 is overpriced (as an investment) and anything under 1 is underpriced. CNN selected metro areas with high momentum and low price.
In selecting Atlanta, CNN singled out Alpharetta as a "typical affluent suburb" and pegged the average sales price at $359,950. I could take exception with CNN that Alpharetta is typical, but that is an entirely different post ;-> Here I want to focus on the average sales price for Alpharetta, which is what the local reporter was looking for, too.
Average Sales Price in Alpharetta for Q1 2008
The average sales price in Alpharetta for Q1 2008 was $384,612. This includes all resale and new construction single family residences. The average for Q1 2007 was $372,895.
The change represents a 3% increase in sales price, but doesn’t tell the whole story. The real story is that in Q1 2008 only 237 homes sold in Alpharetta versus 402 in Q1 2007. That is $63M less sales volume than a year ago.
If you look at North Fulton as a whole, which includes the four cities of Alpharetta, Roswell, Johns Creek and Milton, the numbers show the same pattern on a different scale. [Note: it is a little difficult to separate sales in the City of Alpharetta from North Fulton as a whole because there are homes in Milton that have an Alpharetta postal address and homes in Johns Creek that have a Duluth/Alpharetta/Rowsell postal address, but I did my best based on high school districts.]
In Q1 this year, the average sales price in North Fulton was $423,503 vs. $413,791 a year ago. However, again, that represents far fewer transactions: 474 in Q1 2008 vs 784 in Q1 2007. To most sellers, that is the definition of a buyer’s market regardless of average sales price.
So, while the exposure given Alpharetta by CNN Money is nice to get, I’m not sure that their methodology, as with most "Best of Lists", is anything but hogwash. Yes, we have price momentum. Yes, real estate is priced more affordably to begin with in Atlanta and Alpharetta. But CNN’s methodology doesn’t take into account the inventory that is not selling in this market and the effect that it will eventually have on the overall market. Maybe sellers will just withdraw and wait until price recover. Maybe they can’t wait and will reduce their price to sell. Only time will tell.
CNN Money’s point in the whole story is that Alpharetta is a good place to buy because it has good potential for appreciation. While I couldn’t agree more, because there are some many fundamental growth factors in favor of Alpharetta, the short term prognosis is dicier. Alpharetta real estate prices are increasing; that is, we have positive price momentum which is what CNN Money was measuring. However, you can only take advantage of that momentum if you are able to sell. There were 310 fewer sellers realizing any gains this quarter and a year ago.
Now, on a slightly different slant, if you want to live in one of the skinniest counties in America (Marin County, CA was the skinniest), CNN Money has that coverage for you, too. They actually compared counties based on the body mass of their residents. But what if you have a county with just a bunch of mammoth-sized but lean residents, wouldn’t that skew the rankings? Anyway, you won’t find anywhere in Georgia on that list, that much you can bank on.
Posted by Kevin Warmath | Currently 5 Comments »
No Picture Available | How Not to Market a House for Sale
categories: Alpharetta Real Estate, Photography, Sellers, Stuff I like to talk about
No Picture Available. Like shown on the left, that is what is displayed in the MLS when, duh, the agent has not loaded any pictures.
Pictures increasingly tell the story in our visual age. That explains why home buyers who are browsing homes online are frustrated when they come across a listing with no pictures. Can the seller even be serious about selling if they don’t post a picture? Are they trying to hide something?
Would you be surprised if I told you that in February of this year, of the 65,663 Residential and Condominium properties listed in the Multiple Listing Service for the Atlanta metro area, 5,023 had no photos at all? On top of that, 11,474 only had one photo, when the MLS now allows you to post 12 photos per listing.
I’m not sure if it is malpractice or laziness, but it is unforgivable for a listing agent to not have at least half a dozen well-taken, well-lighted, well-cropped photos of the home they are marketing. And solid quality photography should not be reserved only for million-dollar homes. Digital photography is too inexpensive and easy to learn for every house for sale not to have a photo.
Additionally, the way that people and agents search for homes these days is with "saved searches." Buyers have predefined searches (if you want one, just contact me and I’ll set you up) that automatically notify them of new homes on the market that meet their criteria. If there is no photograph when that buyer gets the notification, that buyer is likely to never consider your home again. You missed your shot.
Photography is a mini-hobby of mine and I take pictures of all sorts of things besides houses, but I’m always looking for ways to take and display house pictures better. One of the coolest new tools I’ve found is piclens, and you can see an example here of some home photos I’ve taken of an awesome home for sale just north of Alpharetta in East Cherokee county.
As time permits, I’m also adding "face shots" of Alpharetta real estate to Zillow. I don’t sweat every detail of these photos, but do post them to Zillow so that people using that service from out of state and relocating to Alpharetta can get a better feel for what the properties look like. They might even call me when they are ready to move…if they like my style ;->
Lastly, I have a collection of what I call lazy realtor photos. I’m not sure if these are humorous or sad. For more on bad real estate photos, check out Athol Kay’s MLS Bad Photo of the Day. Athol has carved a name for himself in the real estate blog sphere just by cataloging other realtors’ photo atrocities.
My Collection of Atlanta Real Estate Photos by Lazy Agents
Agent is either too lazy to get out of the car or doesn’t know how to crop a photo.
This agent can get out of the car, but doesn’t know how to park on the street.
This agent was (too) short ;-> Nice roof, though.
This agent went to art school before real estate.
This agent can’t see the houses for the trees.
This agent was actually a fencing contractor!
So, which is worse, a bad picture or no picture at all? You should never have to find out.
Posted by Kevin Warmath | Currently 1 Comment »
Market Conditions and Zero Down Payment Home Purchases in Alpharetta and North Fulton
categories: Alpharetta Real Estate, Buyers, Local Market Conditions, Sellers
Hello, Buyers: There are 1,004 homes for sales in North Fulton (Alpharetta, Roswell, Johns Creek and Milton) between $225,000 and $500,000. If I were personally looking to buy, I’d be in the market.
It’s a buyers market yet people tell me every day that they don’t think they can buy a house. Some buyers are scared by the recent mortgage industry trouble and don’t think they can get approved. Other buyers think that they should wait longer because prices will continue to fall. Let’s examine that thinking.
I’m not bankable after the sub-prime meltdown
The troubles in the mortgage industry have given some people the unwarranted impression that they can’t get a mortgage, particularly as a first time home buyer. The facts are that the bulk of the sub-prime mortgage crisis was caused by “low doc”, “no doc” or “stated income” loans failing. Basically there were loans available where all the borrower had to do was verbally tell the bank what their income was. The interest rate wasn’t as good as “full doc” loans but, heck, it was a loan and it was often used by investors to purchase investment property.
The problem was that it was abused; people misrepresented their income and ultimately defaulted, particularly as interest rates inched up, as many of these loans were variable rate. Most, if not all, major lenders are not offering the “no doc” loans like there were.
However, there are still many zero down payment loans available. Wells Fargo, for instance, has six different zero down loans to chose from depending on your specific situation with purchase price of up to $417,000. In North Fulton, there are 811 homes to chose from between $225,000 and $417,000. Do you think we could find one that would work for you?
If you have an income (documenting it would be nice) you can get a loan, regardless if you have any money to put down.
The market is still going down; let’s wait some more
The market is definitely slower than a year ago, but mostly just in terms of the number of homes sold. The average sales price is holding pretty steady and in North Fulton the Sales Price to List Price ratio is only down one percentage point to 96%.
The slowness in this market is notable in fewer homes being sold and the average time on the market going up. The table below shows sales data from August 2006 versus August 2007. The data is only for homes listed with a realtor, so it doesn’t include private sales. It is also for resale homes only and does NOT include new construction.
Compared to 2006, $45M less real estate was sold in North Fulton in 2007 and 125 fewer properties were sold. Interestingly, though, the average sales price is UP over $30,000.
| Year | Sales | Volume | Avg Sales Price | Avg List Final Price | Avg Original List Price | Avg Days on Market |
|---|---|---|---|---|---|---|
| 2006 | 398 | $166.5M | $418,432 | $428,984 | $436,687 | 70.3 |
| 2007 | 272 | $120.9M | $444,675 | $462,977 | $474,917 | 94.3 |
My opinion is that the “good houses” are selling and they are still selling for a decent price. Houses that are not in top condition or “challenged” in some other way are either not selling or dropping off the market. If you are a seller, you need to be aware that you have more competition – 1,004 homes on the market between $225k and $500k this year versus 832 the same time last year. This is where the price pressure that sellers are feeling is coming from.
The difference between the east side and west side of GA-400
The numbers above are aggregate for North Fulton. When you look at just the east side, the average sales price has actually dropped about 2% from $431k to $422k in the past year, but the days on market hasn’t gone up as much as on the west side. The average sales price on the west side has gone up from $403k to $478k. I attribute this difference mostly to the affect that new construction on the west side is having on resale values: you can barely find new construction under $700k and the resales are taking advantage of this by bumping their price and daring buyers to find something cheaper – even in this market!
What does all this mean?
If you are considering buying, I think that now is a good time. Prices aren’t going to go that much lower - and on the west side they are actually still going up significantly. Interest rates are at or below 6% in many cases and there are loan programs to help you with down payment.
If you do the math, a $300k loan at 6% for 30 years is roughly $1,800 per month. Throw in a little for taxes an insurance and you are at $2000/month. Compare that to your rent and then give me a call!
Posted by Kevin Warmath | Currently 3 Comments »
Wired Funds to be Required in Georgia Real Estate Transactions
While every trend is towards wireless these days, Georgia is going wired. At least, for real estate transactions, that is. While going wired in this day in age might sound regressive, Georgia will actually be catching up to what other states already do.
Here’s the problem: When certain mortgage companies went bankrupt last month they wrote a lot of bad checks on the way. HomeBanc, for instance, is said to have written $20M of bad checks for loans that were to close the day they went bankrupt.
The way real estate purchases work in Georgia is that they are handled by a real estate attorney. The attorney collects funds from all parties involved in the transaction (buyer and lender) and disburses funds to the seller, the seller’s mortgage company if there was a loan, the real estate brokers for commissions if they were involved, surveyors, home warranty companies, local governments (for taxes due) … the list goes on. Essentially the attorney is a clearing house for the transaction and manages funds through their escrow account.
What happened last month when the lenders’ checks bounced was that the attorneys were left holding the bag. They paid off seller’s loans, wrote commission checks and disbursed sales proceeds to sellers only to have the buyer’s lender’s funds bounce. The escrow accounts of many law firms in Georgia went negative, a big no no if you’re the escrow account holder. Essentially the attorneys became the lenders for the new buyers, which is not the business they are in.
This left attorneys scrambling to cover the funds. Reportedly some were mortgaging their own property and tapping into credit cards looking for a short term fix.
Here’s the solution: For a longer term fix, the Georgia Bar Association convened to review the “Georgia Good Funds Law”, the law that defines what constitutes “good” money for a real estate transaction.
In the past, lenders were able to mail (FedEx) checks to the attorney a few days in advance or the loan officer could even bring a check to closing. Buyers, if they needed to bring cash to close on the property, could bring a certified check from their bank, or if less than a thousand dollars or so, could write a personal check.
No more, if the lawyers get their way, and I suspect they will.
In the future expect that all funds will have to be wired in advance of the closing. The attorneys want to make sure the funds are really in the bank and this is the only way without waiting for checks to clear.
Here’s the ramification: This means that buyers will have to plan ahead to wire funds. Wiring money is not an instantaneous transaction and can take hours if not a day. Many transactions may become “dry closings,” that is, you sign all the documents but there is no money yet because the wires have not come in. And buyers, keep track of your wire confirmation number. That is the only number that the attorney can use to check if your funds arrived. Your name is not on the wire!
All in all, these changes aren’t necessarily bad, just inconvenient because they will make a closing take longer. In cases where you are selling one property and buying another “back to back” on the same day, you may face some logistical challenges. My advice would be to try to close both transactions with the same attorney. If the first transaction is dry, the second will be dry, too, and sellers are just going to have to be patient in receiving their funds.
Other states have lengthy closings and have been able to make it work: Virginia doesn’t disburse funds to the seller until two or three days after closing and California requires that the deeds be recorded at the courthouse before funds are disbursed and possession taken of the property. That can take over a week.
So look at it this way: Georgia is actually taking a step forward by doing away with paper and personal checks and using electronically transferred money only. It is a safer way for everyone involved, particularly the attorneys.
Now if we could just make some progress in reducing the amount of paper (and FAXing, in 2007 for Pete’s sake) in the real estate contract part of the transaction and make it more electronic, then we’d be making some serious progress!
Posted by Kevin Warmath | Currently 2 Comments »
The Definition of Flat: Home Sales Remain Flat in North Fulton County, Georgia
categories: Alpharetta Real Estate, Buyers, Local Market Conditions, Roswell Real Estate, Sellers
Warning: Statistics lie. Well, actually, people can lie with statistics. If you don’t believe me, check out this book.
With that disclaimer, I’ll tell you that the real estate market in North Fulton county is flat…and I’m not lying, really.
He is my definition of flat: In July 2006, 162 single family homes were sold in North Fulton (Roswell, Alpharetta and Milton), west of GA-400. In July 2007, 163 single family homes were sold in the same area.
Good, we’ve now debunked with one statistic the common misconception that the real estate sky is falling. I can see the headlines now in the Atlanta Journal Constitution: “Atlanta bucks nation trend. Real estate market holds firm.”
Heck, it was just last week when the national media couldn’t get enough of the announcement that for the first time the national average sales price actually declined. Yes, that made a good story; always lead with the blood. There is only one problem: I don’t really care about the national average. I mean, I do, but only because it is some sort of global indicator of the health of the economy. But in the end of the day, I care about the national sales average about as much as I care about the temperature of the oceans. I do care about the global environment but, damn it’s hot here and I want to know when it is going to rain next. Real estate is local, too, and the fact that the national average is down doesn’t help me in my market.
The Laws of Real Estate Market Analysis
Law number one is that real estate is local. Law number two is that, not only is it local, it also varies significantly by price point. Law number three is that new construction and resale homes are different markets.
So, while I can say with perfect certainly and a statistical fact to back me up that the real estate market in North Fulton is flat, if we care to look a little deeper we will see some interesting developments in the last year in this market.
1. If you include the other half of North Fulton (east of GA-400), sales were actually down from last year. Four hundred and four homes were sold in July 2006. A year later only 344 were tallied.
2. Average days on market is up from about 54 to about 63. Plus, the number of homes active in the market increased from 1,859 a year ago, to 2,440 this year. Sellers, you have a lot more competition than you did.
3. The good news is that the average sales price is up over last year, so beware bargain basement shoppers. The west side average price increased from $481k to $488k. On the east side, they had a whopping increase from $391k to $436k.
The Breakdown
But remember, statistics lie. What happens when we break down the market by price range and look at absorption rates, the rate that new homes on the market are absorbed by the buyers. Another way to look at it is the months of inventory on the market. Six months of inventory is considered neutral between a buyer and seller market.
The two tables below show reveal some interesting points about our current market, points that are anecdotally reinforced by my personal experience in the marketplace every day. (Totals don’t add because of omitted data at lower prices.)
Overall inventory is up from 5.2 months in July 2006 to 7 months in July 2007.
| 2006 | $200k to $250k |
$250k to $300k |
$300k to $500k |
$500k to $750k |
$750k to $1M |
$1M to $2M |
$2M | Total |
| Sold in July | 666 | 556 | 1348 | 536 | 127 | 58 | 9 | 3858 |
| Current Inventory | 155 | 183 | 522 | 308 | 148 | 126 | 47 | 1669 |
| Months of Inventory | 2.8 | 3.9 | 4.6 | 6.9 | 14.0 | 26.1 | 62.7 | 5.2 |
| Days on Market | 47 | 45 | 45 | 46 | 56 | 75 | 112 | 154 |
I don’t know that this is exactly earth shattering, but there are two different markets in North Fulton: the market below $750k and the one above $750. Actually, I think the demarcation line is a little lower, but there are definitely two distinct markets. This seems pretty logical. Not everyone has $750k to spend on a house but a lot of people still want to live here and have $400–$500k to spend. That part of the market is still hot…OK, warm, particularly west of GA-400.
| 2007 | $200k to $250k |
$250k to $300k |
$300k to $500k |
$500k to $750k |
$750k to $1M |
$1M to $2M |
$2M | Total |
| Sold in July | 602 | 509 | 1228 | 573 | 125 | 65 | 9 | 3442 |
| Current Inventory | 172 | 207 | 715 | 440 | 181 | 142 | 56 | 2014 |
| Months of Inventory | 3.4 | 4.9 | 7.0 | 9.2 | 17.4 | 26.2 | 74.7 | 7.0 |
| Days on Market | 48 | 52 | 55 | 54 | 66 | 90 | 103 | 131 |
There is one caveat, though. This year, there is more inventory, no doubt, so your home has to be in better condition and compare favorably to increased competition in order to sell. However, even though it is more competitive, good homes in these price ranges still sell relatively quickly (under 60 days) for around 97% of the list price. Operative word was “good”. The junk sits on the market.
New Homes
When it comes to new homes, the picture is a little more bleak. First of all, there is practically no new home inventory below $500k (only 43 homes in all of North Fulton.) When selling your $800k resale home in a market with 17 months of resale inventory, don’t forget that there are 120 new homes in inventory, too. This is where the market has really slowed down: In 2006 there was a 22 month inventory of new homes between $750k and $1 million. In 2007, there is a 45 month supply west of GA-400 and a 33 month supply east of GA-400. Buyers, this is where you can really drive a bargain. Builders are offering huge incentives and resellers are having to lower their prices if they truly want to sell.
Bottom Line
I’m a bottom line guy, so here goes. Markets go up; markets go down. That is reality. No one was bemoaning the poor buyers a few years ago when everything was selling. Now all I hear is woe is me from the media and from the sellers. If you want to sell you home, North Fulton is still a desirable place to live, people are still coming here and home prices are still increasing believe it or not. But if you want to sell, you need to be realistic about your price and the condition of your home. Best thing about this market is that if you are a buyer it is a great time to buy. When was the last time you heard a national media outlet say, “Great time to buy residential real estate in America.” Well, come to North Fulton.
Posted by Kevin Warmath | Currently 3 Comments »
Here’s My Buyer…Do You Want to Sell Your Home in Milton?
categories: Buyers, Milton Real Estate, Sellers
(To the tune of Gershwin’s “I Got Rhythm”)
I got buyers
They’ve got money
They need to move
Who could ask for anything more?
In a buyer’s market, it is a good thing to have buyers if you are a realtor. I work with both buyers and sellers in my business, but my website and blog have always generated more buyers than sellers, which is understandable given that normally people seek out websites and information more often when they are looking to buy than sell.
Given I have this world-wide buyers magnet, I thought that I’d exploit it if you’ll indulge me. You see, routinely when I’m talking to sellers, particularly those who are considering “for sale by owner” or who aren’t terribly motivated to sell, they say “just bring me a buyer.”
These sellers either don’t understand or don’t appreciate how the home selling process really works (which is outside the scope of this post but worthy of another), or more likely they believe that realtors can just manufacture buyers for all shapes and sizes of homes, no matter what their shortcomings, demerits or hideous floral wallpaper are. Many sellers believe that buyers should be about to look beyond the decor and minor defects and that their home is God’s gift to some lucky buyer. It just doesn’t work that way in a buyer’s market.
Well, through the power of the web, while I can’t actually manufacture buyers, I have had some success in attracting them to North Fulton, Alpharetta and the surrounding cities. In the last 18 months or so, almost 1,300 users have registered on www.LiveInAlpharetta.com. Not all are serious, active buyers, but even if 10% are, that is still a significant number. The fact is: web marketing works and my business has proven it.
Traditionally realtors have marketed homes to buyers. Look at any newspaper, magazine or real estate website and you’ll see pictures of homes for sale. Makes sense. The homes are “the bait” to attract the buyers - and remember, everyone wants the buyer. He or she is the one with the money! Just bring me a buyer. That is all I need. Oh, yeah, and it only takes one. (That is another myth to be debunked in a later post.)
I thought that since I do have a bunch of buyers -and buyers are what everyone obviously wants - that I’d promote one here. Let’s flip the sales equation around and instead of marketing homes to buyers, let me market a buyer to a home (seller). Fells a little bit like the girl calling the boy up for a date, doesn’t it? I always loved Sadie Hawkins.
Without further ado, here is my buyer:
Currently residing in Northern Virginia. Wants to move back to GA to be closer to family. Has a home to sell that is on the market and getting decent activity buy no contract yet. Wants to be in Crabapple Crossing Elementary School district, but will consider other good schools in the area. Wants at least 4 BR, with a basement. Swim/Tennis neighborhood would be nice. Thinks that they would be able to possibly move at the end of the year (between school semesters). Price Range: high $500’s to $600k.
If you are a seller out there and thinking of selling but haven’t because you think the market is soft please consider my buyer for a match and contact me. Even if this buyer isn’t a match and you want to sell, please contact me. I have other buyers, as long as you keep in mind that I can’t actually manufacture one to your exact specifications! .
It does feel a little strange pitching a buyer to the seller, but I’ll get over it. In a buyer’s market you would expect there to be more sellers than buyers and that my buyer would have his pick of houses. Indeed, the MLS data bear this out. As of July 2007, in North Fulton (Alpharetta, Roswell, Johns Creek and Milton) there were 581 more homes on the market than in July 2006.
I just thought that since all the sellers seem to be clamoring for buyers - and because my buyer is not quite ready to buy - that I’d post his credentials and see if anyone wants the buyer bait for a change, instead of the other way around.
Posted by Kevin Warmath | Currently 2 Comments »
$100,000 Price Reduction on Alpharetta Home for Sale - The Price of Ignorance
categories: Sellers
That is not a typo. Yes, a ONE HUNDRED THOUSAND Dollar reduction, and after only 17 days on the market. But I don’t care if the property had been on the market for a year, a $100,000 price reduction on a house worth less than $1M is a miscarriage of the free market. Or maybe it is the free market: free to try to rip off some unsuspecting buyer.
The economic theory of Rational Expectations says that people do not make systematic errors in predicting the future and that any deviations are the result of mistakes and ignorance. I won’t call the seller ignorant, because that would be rude, but he certainly made a big mistake that will cost him in the sale of his house.
The reason is that Real Estate Pricing Theory shows that most of your potential buyers view the property in the first few weeks. That is because most of the qualified buyers in the market have seen everything else and didn’t like it. Now they are waiting on the sidelines for new listings they might like to become available. When they do, the buyers rush out to check them out. After a few weeks, these pent up buyers have all seen your house and now the only people to view it are people new to the market. These people may just be starting their search, may not need to buy as urgently, may not be financially qualified yet or may still need to sell a home.
Back to our seller who overpriced his home by $100,000. Admittedly, this seller represents an extreme case of overpricing, but his mistake first caused him to miss the initial flood of buyers: The people who were most likely to ultimatley buy his home never looked at it when it first hit the market. His proper audience may see it once it was reduced, but they may not, too. A new listing has more impact on the market than a price reduction.
However, the larger damage in my opinion is that this buyer has trashed any good will that potentially could have existed between buyer and seller in negotiating the sale. The seller has shown that he is not trustworthy. Buyers who do look at the property will say out loud: “What was this guy thinking?” And to themselves they will be thinking that the seller may still be trying to rip them off.
The funny thing is that the house is still probably overpriced and will ultimately sell for about $20k less than currently listed…when it does finally sell.
Posted by Kevin Warmath | Currently No Comments »
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