Reasonably priced = reasonable buyers? (income tax, negotiating, mortgage, sales)

[GregTraub]

Suvey's of customers across multiple industries all say the same thing. Over 60-70% of americans would rather not have to negotiate much. This is a major reason why so many buyers are on the sidelines right now. Sure they can go in and offer 400K on your 525K house, but many people simply are afraid to insult you, and afraid of the negotiation process. So the only people that are left are the people with the "strength of will" to make a low ball offer at what they beleive the value is. And more likely than not it will be below what a non-negotiator is willing to offer. The non-negotiator places a value on the ease of the transaction and avoidance of the confrontation they perceive as the negotiation process, a value you may be able to translate into a higher selling price. So pricing correctly is critical for your probability to selling for top dollar.

You mentioned there are similar homes in your area going for 600-650K! are these people being offer 500-550K? Or are they being offered 400K like you, or no offers at all because even the negotiators don't want to waste their time? I find it hard to beleive buyers are arbitrarily picking 100K as the magic # to offer below asking. It is more likely the market is telling everyone how much these homes are worth.

Psychology also plays a big role in todays market. Alot of those non-negotiators on the sidelines are so petrified of making any offers because they think they will be taken advantage of in this "bad" market. Many will simply wait until the news says it's ok to buy. If you are priced 50-75K below other homes though, you look like a great deal, even if sales are still 25K below what your asking. This perception of a great deal can be enough to get these buyers over the hump.

[olecapt]

Originally Posted by Evey

O.K., I am a buyer in FL. The part of the state I am in does not have jobs with salaries to support houses that cost $600K, $500K, or $400K. Median incomes here are somewhere around the $40K mark, give or take.

So reasonably priced compared to what? What they were in 2004/2005? What they were in 2000, when regular working people could afford a house?

Also, I can look and see what was paid for a house here in this county. When I see a house that someone paid $60K for 10 years ago and they are now trying to sell for $250K it just pisses me off. 60+ year old homes that still have original kitchens & original glass on glass jalousie windows, and I even saw one with a fuse box for crying out loud. What I have not seen is a house that is worth the asking price. I am not afraid to paint, rip up flooring, gut a kitchen, or even replace a roof. But I am not going to finance someone's retirement for the privilege of doing those things. I realize that many, many folks got sucked in and paid too much for their homes, or cashed out a bunch of equity. I am sorry for those poor decisions on their part. But I am not going to bail anyone out.

Ten year old values are irrelevant. Two year old values are irrelevant. What are the comps selling for today? You can expect worried sellers so you can likely project a few percent below the comps if the values are dropping quickly. If they are not you need to come to the comps or find someone who needs to get out badly...a difficult but not impossible task. Cuts your choices down though. Generally only 10% or so of the homes will be in a big hurry. Repos are also good for a buy.

[AnthonyB]

Originally Posted by GregTraub

Suvey's of customers across multiple industries all say the same thing. Over 60-70% of americans would rather not have to negotiate much. This is a major reason why so many buyers are on the sidelines right now. Sure they can go in and offer 400K on your 525K house, but many people simply are afraid to insult you, and afraid of the negotiation process. So the only people that are left are the people with the "strength of will" to make a low ball offer at what they beleive the value is. And more likely than not it will be below what a non-negotiator is willing to offer. The non-negotiator places a value on the ease of the transaction and avoidance of the confrontation they perceive as the negotiation process, a value you may be able to translate into a higher selling price. So pricing correctly is critical for your probability to selling for top dollar.

This portion of your post is outstanding.

[Frudy McRomson]

Originally Posted by olecapt

Ten year old values are irrelevant. Two year old values are irrelevant. What are the comps selling for today? You can expect worried sellers so you can likely project a few percent below the comps if the values are dropping quickly. If they are not you need to come to the comps or find someone who needs to get out badly...a difficult but not impossible task. Cuts your choices down though. Generally only 10% or so of the homes will be in a big hurry. Repos are also good for a buy.

10 year valuations are not irrelevant when it's clear from projections that housing exploded in value over those 10 years through pure speculation and post-9/11 stock market jitters. That makes a clear indicator that it's time to wait on the sidelines and let sellers hold their breath until they're ready to negotiate. The fun is just getting started.

[olecapt]

Originally Posted by Frudy McRomson

10 year valuations are not irrelevant when it's clear from projections that housing exploded in value over those 10 years through pure speculation and post-9/11 stock market jitters. That makes a clear indicator that it's time to wait on the sidelines and let sellers hold their breath until they're ready to negotiate. The fun is just getting started.

Utter nonsense. Put up your trilevel tent and move in for the duration?

You sell one at market and buy another at market. YOu ride up or down with the market. The vast majority of American own a home for a place to live...not as Real Estate investment.

Put your kids in a rental in the wrong school district? Move them again in a year when housing values in the area start up? Right

Rent a beat up 4 bedroom which is the only house available in the desirable school system? Right. Tell the family you are roughing it for a year or two so you can make money in the RE Market? Right.

[Frudy McRomson]

Originally Posted by olecapt

Utter nonsense. Put up your trilevel tent and move in for the duration?

You sell one at market and buy another at market. YOu ride up or down with the market. The vast majority of American own a home for a place to live...not as Real Estate investment.

Put your kids in a rental in the wrong school district? Move them again in a year when housing values in the area start up? Right

Rent a beat up 4 bedroom which is the only house available in the desirable school system? Right. Tell the family you are roughing it for a year or two so you can make money in the RE Market? Right.

Yeah, I guess there must be a lot of trilevel tents in those spec markets, because people apparently aren't buying "homes" in those areas.

There are people I am personally familiar with who are multi-millionaires who have ZERO stake in RE, or sold their house and rented (along with their family) 2 years ago, just before they placed their put options on subprime mortgages (i.e. Countrywide) and Beazer stock. Their family has been sitting a LOT prettier than someone living in a spec market.

Any statistics supporting the claim that the vast majority of Americans own a place to live in? From the perspective I see, many leave within 5 years or own a second "home". If people bought with the intention to live, we wouldn't be seeing this problem in the RE market, especially in areas like FL, CA, and LV.

Mingling the term house and home is a nice catchy realtor-ease speak. Keep repeating "you need a place to live", "location location location", "God ain't makin' more dirt", and a few other trendy passages and maybe sales will increase?

[olecapt]

Of the REPOs and shorts in Las Vegas 60% were owner occupied. At the peak it is a tiny percentage of the homes in Las Vegas. At present less than 20% of the sales in Las Vegas are REPOs. The 80%+ non-REPOs continue to hold their value well. We appear to be approaching or at the bottom.

I know of multi-millionaires who spend their lives living in abject poverty so as to optimize their wealth and then give 25 million to the ASPCA on their death. If that turns you on go for it.

[Frudy McRomson]

Originally Posted by olecapt

Of the REPOs and shorts in Las Vegas 60% were owner occupied. At the peak it is a tiny percentage of the homes in Las Vegas. At present less than 20% of the sales in Las Vegas are REPOs. The 80%+ non-REPOs continue to hold their value well. We appear to be approaching or at the bottom.

I know of multi-millionaires who spend their lives living in abject poverty so as to optimize their wealth and then give 25 million to the ASPCA on their death. If that turns you on go for it.

Most of these multi-millionaires I'm familiar with are more normal and less eccentric than the ones you are citing. While they tithe and offer a nominal amount in charity, their rentals are much nicer than "homes" owned by people at similar income levels, and their outside investments are yielding much higher real (post-inflation) returns than their "owning" counterparts. They vacation, own a few nice possessions, and go out to eat, just like most people. They just don't charge for something they need RIGHT now to sacrifice on future consumption levels. Any debt accumulated is meant directly at an income producing asset such as a small business startup and the like.

While my gold, oil, foreign stocks, and other non US dollar denominated assets (short of any puts on homebuilder stocks over the past year) have exploded in value, I'm not quite at the multi-millionaire status, YET . Owning a SMALL "home" (home because I won't move in a few years like most people do) allowed me to diversify out of real estate into more lucrative projects. I bought a house near Philly when people were buying shares of VA Linux at over $100/share. When people started buying real estate like sheeple, that's when I knew to leave and start the current track I'm on. When the gold/commodity craze hits over the next couple of years, it'll be time to liquidate those holdings, and so on...

The RE market has yielded the floor to higher yielding investments and confusing a house with a "home" is just a marketing ploy. When a "home" is bought or sold, it ceases to be a home and instead becomes a cold, hard commodity.

[CouponJack]

All you have to do in many markets (like florida) for instance is take a look at a 10-15 yr appreciation and watch the slope increase rapidly after '02-03. Prices will need to come down eventually to come back to historical norms. This cycle is no different. There will be buyers on the way down but eventually they will come back to historical norms....they always do as history has told us.

[monkeyboy]

They may have come in low at $100k under and may be willing to negotiate....that offer might start to look good come next summer....