Hi folks. I had one of my Sellers email me earlier today needing an update on what is going on with her property. She's an absentee Seller and I could feel her frustration. She had been to my Poinciana website and noticed that I had just closed on a short sale that was similar in size to her house. Anyway, I'm sure many of you are getting these types of emails, so, I decided to post my response here, just in case it will help you with responding to your Sellers. The main thing, of course, is too just be honest. As a listing Broker, I can't control the market and I certainly don't take responsibility for it.
When I first listed this property we were within 5% of market value and have in fact had 2 offers on it that were turned down. So here's my response to my Seller.
START OF EMAIL
Thanks for your email. I did just close on a short sale property a couple of weeks ago. It was about the same size as yours but was a single story. It sold for $140,000 with the seller paying $8,400 towards the buyers closing costs for an effective selling price of $131,600.
We are getting some activity on your home but it is very sporadic. I have attached a market report showing how homes with at least 4 bedrooms, 2000 sq ft or more built no earlier than 2004 are doing in Poinciana since we placed yours on the market.
What it shows you is that there are currently 199 homes for sale that meet these parameters. The average home has 4 bedrooms 2,551 sq ft and is priced at $174,413 or $68.49 per sq ft. For reference yours is priced at $74.79 per sq ft.
There are 18 properties under contract(pending). These are on average 4 bedroom homes with 2,623 sq ft priced at $151,446 or $58.50 per sq ft.
There have been 52 sales since your house was placed on the market. These were 4 bedroom homes with 2,552 sq ft and sold for $160,917 or $64.30 per sq ft.
This shows me 2 things:
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First, the homes that are selling (sold and pending) are larger than yours and are selling for less money per sq ft. The sales are at $64.30 and the pendings are at $58.50.
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Secondly, this shows me that prices are still declining. That means that your house will be worth less tomorrow than it is today and less next week than it will be tomorrow.
The last time we discussed pricing was 4 July. At that time, the average price per sq ft was $66.00. Your house at that time was worth $141,000. Based on that figure a price reduction to $149,000 was suggested. You agreed to $159,000.
Based on today's price per sq ft the value of your house is $137,500. So the issue is still pricing.
Poinciana is averaging about 45 sales a month out of 1200 listings. That means that there is 26 months of inventory on the market. 83% of the sales are either bank owned properties (REOs) or short sales.
So, to answer your question, people are looking at the best priced properties out there. If they can find a bare basic house that is relatively new for $20,000 less than yours then that is what they are buying.
To compound our market difficulties, as of September 31st, Seller paid down payment assistance will no longer be allowed. This is a huge part of the market in Poinciana. FHA is also raising their minimum down payment from 3% to 3.5%. Mortgages are getting more and more difficult to get.
So what do you do?
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Reduce it and sell it before it gets worse.
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Rent it out.
Here is a link to my latest market report.
I hope this helps you to understand what's going on. I'll look forward to your thoughts. Please feel free to give me a call if you want to chat. END OF EMAIL
Folks, chasing a declining market downward is a losing proposition. What say you?
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BB ... I say "Phhewww" blowing the smoke away from the barrel of the truth gun that you just shot them with! That was the most professional ... to the point...no holds barred answer I have ever heard. Did TLW teach you that trick emailing?
Forgot ... I'm book marking for future reference.
I've written many letters like that one. I have one that I need to write this weekend. I always try to get my sellers to really think the first offer over. Sleep on it even before rejecting. Not because I want a quick sale but they always seem to end up being the best one. In fact, I can't really think of one time when it wasn't the case.
All you can do is just keep on being honest and presenting the facts. Sometimes the truth hurts and sometimes you have to be willing to let them go.
Great job on presentation and typing with one hand. Your other fingers seem to be keeping a pulse on the market.
You guys have a great weekend. I'm counting the days for my Florida trip.
That's the only way to do it. I like your detailed email giving all the facts and stats. What more do they need to see? They are just chasing the market down and will continue to do so unless they take your advice. NOW.
Geez. I love it when you talk real estate.
LOL I can't stop laughing at your Vlog where you're driving around snarking buyers off the street! I love it!!
Just the facts....It is a shame folks think their home is the exception.
" Geez. I love it when you talk real estate."
Comment of the week! Now, that needs to be a group! Comment of the day!
To compound our market difficulties, as of September 31st, Seller paid down payment assistance will no longer be allowed. This is a huge part of the market in Poinciana. FHA is also raising their minimum down payment from 3% to 3.5%. Mortgages are getting more and more difficult to get.
I just told a sellet this last night on a very low starter home. I am concerned in a few months the buyers will be even fewer. This offer was brought in the with the Geneis program.
BB - You are absolutely correct that chasing the ever declining market is a loosing battle. We can only counsel our sellers when it comes to pricing, but do they listen? BTW, I like your graph design, however the results are very depressing in Poinciana.
BB,
Yep been there...done that. And without actually hearing it....I know that's what they're thinking.
If they don't like the information we give they either disagree or ignore it.
The hardest thing about dealing with sellers is that they love the home that they have experienced so many family memories in, and they painted and decorated and landscaped it so that it is "perfect". So in their minds, it doesn't compare to any of those lower priced homes, so they insist theirs is worth more. Well it is worth more to them, but not to the bargain hunting buyers out there. That's a hard pill to swallow, Mr. Seller, but them's the facts!
BB - I don't see how you could be any clearer regarding the issues adn the discrepancies. Somes folks still can't face reality, or keep that their home will be the exception. Those always seem to be elusive. Thanks for sharing this - we will look forward to hearing the outcome.
Jeff
You did a great job of taking the emotion out of it I thought. Just the cold, hard facts.
BB - your response to this seller is perfect. Factual, well documented and to the point. I think your seller should have taken the first offer, but we all know that hindsight is 20/20. Great post - keep up the good work.
BB, honest, real, to the point. There really is no other way in a declining markte. Your market is very tough at the moment. I hope it is able to recover resonable soon. As to Missy's point on Nehemiah, a number of banks have already stopped accepting Nehemiah type programs. We will stop taking Nehemiah on Sept 1st unless it has been registered. Aj
Great post. I really liked the way you provided the seller with a very succinct overview of her market. Kinda hard to repudiate facts. Good to see someone else's style and how they present it. By the way, do you bolden the first line in each paragraph like you do in the blog posts?
Yep, we're giving the same message to our sellers in Tallahassee. Some of them "get it" and many cling to the hope that they will get the price they want if they just wait long enough ... after all, they "don't want to give it away".
I recently met with a seller at a listing presentation and showed him that comparable properties were selling at less than $200,000. In spite of the facts, he thought he should be able to get $350,000 if he could find the right buyer. He decided to put a FSBO sign in front of his property to catch the attention of the traffic outside his home, which was in an isolated (but beautiful) part of town.
It is hard when you are trying to get the seller to understand that they need to get in front of the market not behind it. When they do decide to drop the price to stay in the game it is to little and generally to late.
Wow- that was a really well written response and highlighted all the relevant information without any emotion or judgement. "Just the Facts Ma'am." Way to go Joe Friday!
But MY house is still worth $75 a s.f. RIGHT?
Well hello there everyone. You know...that chart up there is real. You just can't get much more visual than that to show a declining market!!!
I've found that by writing these types of updates it really helps the sellers understand what's going on. My sellers do understand the market it's just so many are very marginal with what they can sell their homes for without getting into a short sale situation. And if they don't qualify for a short sale they are in a very bad position.
As always I really appreciate you guys stopping by and participating in the conversation.
Bryant,
I broke my crystal ball back in 1984 and consequently decided to get out of construction and into rea estate here in Texas in 1989. Hmmm...Thousands of homes on the market. 1,500 -2,000 foreclosures a month and what? maybe two dozen buyers? You are in a tough market my friend but you are absolute correct when you tell sellers to:
"Reduce it and sell it before it gets worse."
People often CLING to unrealistic hopes that someone will come along and
take it off of their hands" but the fact is until you have solid signs of recovery, the longer a seller waits to price realistically, the more they will lose! Hang in there!
:)
Bryant- The sellers in Poinciana have great reason for concern with the down payment assistance going bye bye and the increase to 3.5% for FHA down payments, nothing like rubbing salt on the wound!
Now to get the sellers to understand these implications, a different story.
Bryant- The sellers in Poinciana have great reason for concern with the down payment assistance going bye bye and the increase to 3.5% for FHA down payments, nothing like rubbing salt on the wound!
Now to get the sellers to understand these implications, a different story.
Great letter. So, did they reduce the price yet?
Oh but you ARE responsible, didn't you know that? You are a REALTOR(R) and you obviously have a crystal ball... you also control all of the buyers and lending and and and :)
P.S. I really like how you've displayed the data. I think I may do the same simply to show that our market, although softened, is holding steady (at least prices are, # of sales are not).
To compound our market difficulties, as of September 31st, Seller paid down payment assistance will no longer be allowed.
Just a small note.....there is no Sept. 31 ;)
Hang in there BB!
Hey Stan...good to see you. I must be getting old :)
Oh, I thought you were responsible for the decline in home prices. Aren't you most powerful being in all of Poinciana? (OK, other than TLW)
Great blog and great response BB. Long time no talk. Hope all is well (other than the declining market) down in FL!
BB...the facts will ALWAYS trump emotion, or even a willingness (or lack thereof) to make an adjustment to the price.
All factors being equal, that is one of the best laid out descriptions of the market place that I've seen come from a realtor/broker. When are you gonna franchise out your knowledge?
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