Mixed Messages Got You Down?

You’ve read the articles in the local and national newspapers and the multitudes of national, “respectable” money/investment type magazines proclaiming that the Emerald Coast (especially Panama City Beach) has the greatest opportunities for real estate “appreciation” in the country. Rumor has it that things are selling and the market is coming back. Why, then, are sellers bringing checks to closing? If you read my article last month “2007 a Basis for Optimism”, there were a number of things that needed to happen - the least of which was the need for everyone, buyers and sellers alike, to get real with their expectations.The facts: 1st quarter of 2007 is already over and the facts have spoken for themselves.· Gross sales comparisons of the 1st quarter 2006 vs. 1st quarter 2007, 2007 sales are down 11.19%.· Foreclosures are up and expected to increase in numbers.· Auctions are still kicking around even with their lack luster results.· Taxes and insurance remain at the top of the buyers’ concerns.· Too much inventory (and still more coming), buyers writing low ball offers and sellers not proactively negotiating.· Properties that sold during the 1st quarter of this year did so at 94.02% of asking prices. How, then, will 2007 meet the expectations we had all anticipated? What is going to be the fix? Why did those properties that sold do so at 94.02% of the asking price?· Those properties that sold had reduced their prices to a point where the buyers saw the value.· Buyers wrote reasonable offers because asking prices had been reduced to reasonable levels. The majority of serious buyers do not like to write low ball offers. There are serious and qualified buyers with pent up buyer frustration shopping in this real estate market looking to buy right now. Why they aren’t buying is not because of interest rates or the lack of consumer confidence - it’s because they cannot find value in the properties that they are viewing. Here’s the test we use with our sellers when pricing our listings. If you Mr. or Mrs. Seller are in the market today as Mr. or Mrs. Buyer, knowing your property better then any potential buyer would know your property; what would you be willing to pay for your property? Wow…that really adjusts the asking price and it does make a difference when it hits the market. Properties are perceived as a value or unrealistic based on their asking prices. With all of these serious and qualified buyers on the market there is no justification for properties to languish on the market for more than 60 days. The buyers are out there and interest rates are still at 40 year lows. If they are priced at today’s values, they will sell and they will sell at 94.02% of your asking price. I said it six months ago and we are seeing it today, the pricing of 2003 is at hand. Just about every property sold in the 1st quarter had 2003 values written all over it. The segment of the market most representative of 2003 prices are those priced between $700,000 and $1,500,000. This is the segment of the market that is truly flooded with inventory and is the range that needs the greatest amount of adjustment. The fix is simple, we have returned to the traditional method of real estate investing; buy, hold (3-7 years), then sell. Everyone needs to be more realistic with expectations, because there are no emotional buyers and the properties that are selling are doing so at 94.02% of asking price.