Housing Bubble? Your thoughts, predictions (Portland, Westbrook: foreclosure, renters, condo)

[corgis]

I'm wondering and I don't know the answer but does anyone know if houses that are fully paid for, free and clear of encumberances sell better than those with mortgages and/or other problems like tax liens, property liens, that kind of stuff?

[Elcarim]

In our case, if we didn't have a mortgage dictating our bottom line, it would probably already be sold, because we'd be able to significantly reduce the price and go under market.

We have some friends who pu an offer in on a house about 3 months ago. They have been waiting and waiting to close, only to find that there was a problem with the deed due to some kind of lien. The owners can't seem to get it cleared up. They have had to walk away from that deal and keep looking.

[WhoFanMe]

Originally Posted by Elcarim

We're just the opposite. We're coming from a low priced market, where our nice brick home should sell for $62 or so a square foot. That's the main reason we don't have any room to move much on our price. When other homes are listed at $350K or so, they can afford a $10K price drop with little pain. A price drop of any amount for us is much more significant, and becomes the difference between affording to move and not.

A 10,000 reduction on a 350,000 listing will not generate much more than a few yawns from the buyer pool, it would take something more like 20,000 to 35,000 to re-position the home. That home, in a depreciating market, originally listed at 350,000 will probably sell for 310,000 to 320,000 after months on the market with incremental price drops keeping pace with the market - if it sells at all. Had the home been properly positioned initially at 329,000, it probably would have sold for 325,000 and gone under contract in 30 days or less.

I know that's not the message you want to hear El, but if I was your agent, I'd be sitting down with you and letting you have it. If I'm not mistaken, I believe you posted that the agency that you are with (I realize the agent has moved on) told you that your house should be listed for more than you expected and that raised a red flag in my head. Unfortunately, that agent was wrong and that's not your fault, she told you what you wanted to hear and not what you needed to hear. I wish you had interviewed 2 or 3 agents to get a better perspective on how to get your home sold. Again, I stress that I don't know your local market and I hope I'm wrong, but if you were in my area and in this position, we would be having this conversation. Please don't think I'm beating you up, I'm not. I have had this discussion with 2 sellers in 2007 and in both cases, they withdrew the home from the market. The market, the buyer pool, determines the value of your home - not an apprasier or a real estate agent. Unfortunately the market doesn't care about your reasons for moving, or how much you need to "get" out of the home or the price of your improvements, the market only cares about what it will cost to to move in and in many areas that figure is dropping every day. Some sellers are having to bring cash to the closing table in order to sell their homes, it's a by product of low equity and the depreciating market that we're in today.

[elston]

We just hope that we don't have to bring money to the table to close the sale. We already know that we aren't making anything and are losing most of our downpayment on the current house. The agent makes his commission, the buyers get a good deal on a beautiful house and we walk away with empty pockets.....but hustle as fast as we can to Maine and try to make up with a good buy there......"a consumation devoutly to be wished for".

[elston]

WhoFanMe you took the thought right out of my head and the words from my mouth.....not the good advise but "bringing money to the table".

[Elcarim]

We're actually priced below every other house in our neighborhood at $62.45 a sq ft, and we have one of the nicest houses in the neighborhood. I'm not just saying that because of all the personal work we've put into this house. I've actually toured several of the other houses and viewed the rest extensively online.

The really confusing aspect is that homes that are priced higher than ours and are not in as good a condition as ours are still selling. That just confuses the hell out of me, and it really makes me question our agent's marketing tactics.

And the price we're at now was after WE requested a reduction to get under the rest of the homes in our area, while our agent kept telling us it was too soon to reduce because we were at market value. The only ones in town that are priced below $60/ft now are the dumps and frame houses with no property. We thought that was putting us in a competitive position. Now I fear that the lack of advertising our first 30-45 days on the market has completely killed us. That's how long it took them to even get us in the newspapers. I don't even think they have done any networking with the other agents in the area. If they have, we haven't been informed of the effort.

[WhoFanMe]

Originally Posted by corgis

I'm wondering and I don't know the answer but does anyone know if houses that are fully paid for, free and clear of encumberances sell better than those with mortgages and/or other problems like tax liens, property liens, that kind of stuff?

When I'm initially working with buyers, we don't know whether the seller has 1% or 100% equity. If the sale of the home would create a "short sale" the listing agent either discloses that prior to showing or after an offer is received on the property that the offer will need bank approval. At that point, the buyer needs to make a decision as to whether or not they want to wait and do the extra work it would take to purchase the property. I showed one of these home yesterday that my buyers loved online by the flattering pictures, but when they saw the condition of the home were quickly turned off and crossed it off their list.

If the house does go under contract, most of the liens you mentioned can be resolved out of the seller's proceeds- if the owner has any equity, but it's not always easy and can be an agonizing process. The buyer has to decide if they are willing to go through the exercise.

To answer your question, I don't see any additional value in your home if it's paid off. You as a seller would probably prefer an offer from a buyer that is 100% cash, as those can be closed much quicker and without an appraisal. I had cash buyers in 2006 who absolutely had to have a home, which may not have appraised for the price they paid, but they plan to stay in the home for 10-20 years and unless the U.S. economy fails, they will be fine when it's time to sell.

[Elcarim]

And WFM, I don't take any constructive advice offensively. We NEED to understand where we are and how to accomplish our one goal - selling the house. Any advice is greatly appreciated. We're not real estate experts, and this is our first home to sell, so we're completely ignorant of the process other than the months of online research we've done on the subject.

Thank you for sharing your wisdom!

Oh, and we did interview with 3 different realtors before choosing the one we did based on her sales stats in our area. They all placed us about the same price, within a couple of thousand of each other. We assumed they knew what they were talking about.

[WhoFanMe]

Originally Posted by elston

We just hope that we don't have to bring money to the table to close the sale. We already know that we aren't making anything and are losing most of our downpayment on the current house. The agent makes his commission, the buyers get a good deal on a beautiful house and we walk away with empty pockets.....but hustle as fast as we can to Maine and try to make up with a good buy there......"a consumation devoutly to be wished for".

Elston, that is what is is unfortunate about the current market, good people are getting hurt, but you are correct you have to judge your experience on BOTH deals. The agent that lists your home is splitting it 4 ways (unless he/she has the buyer, as well) before marketing expenses, Federal, State and local taxes and both ends of FICA Medicare taxes) but has had to work that much harder (and longer) to get the deal to the closing table.

[WhoFanMe]

Originally Posted by Elcarim

We're actually priced below every other house in our neighborhood at $62.45 a sq ft, and we have one of the nicest houses in the neighborhood. I'm not just saying that because of all the personal work we've put into this house. I've actually toured several of the other houses and viewed the rest extensively online.

The really confusing aspect is that homes that are priced higher than ours and are not in as good a condition as ours are still selling. That just confuses the hell out of me, and it really makes me question our agent's marketing tactics.

And the price we're at now was after WE requested a reduction to get under the rest of the homes in our area, while our agent kept telling us it was too soon to reduce because we were at market value. The only ones in town that are priced below $60/ft now are the dumps and frame houses with no property. We thought that was putting us in a competitive position. Now I fear that the lack of advertising our first 30-45 days on the market has completely killed us. That's how long it took them to even get us in the newspapers. I don't even think they have done any networking with the other agents in the area. If they have, we haven't been informed of the effort.

I agree with everything you're saying here, the first 14 days on the market are crucial to a favorable result. I'm not convinced that newspaper advertising (other than open house promotion) has any value, but there are things that need to be done immediately to get your property noticed. I would ask your agent for a complete accounting of everything done after you signed the marketing agreement and the dates involved - that should be interesting.