So here I am, working my first real week back from vacation.
And for whatever reason, two potential sellers with homes in the $2 million
plus range were anxious to meet. One had a beautiful custom home in Arrowcreek
with a gorgeous view and tasteful personal touches, while the other was a very
large spec home in Somersett with some beautiful attributes, and a few, um,
Seller number one has the best trimmed house I’ve ever seen
in Arrowcreek, with superior golf and city views and a good floor plan, though too
big for most buyers. Of course the owner is totally proud of this home as he
built it himself for his family. It is lovely, and the craftsmanship top notch,
but the stone balusters and light woods won’t appeal to everybody.
After the grand tour, we sit down on the back veranda, and I
lay out the market in a series of spreadsheets. The bottom line? This market is
hostile for sellers, and in this price range, your chance of selling is about 1
in 70, and the only way you’ll ever sell is to be the best value, as in price
it low. Well, I could see he wasn’t into that as he hardly looked at the
numbers I had so carefully assembled and analyzed for him.
Then came the fateful, “I don’t have to sell…” So I
suggested that maybe he shouldn’t. Now’s not a good time. There’s so much
inventory out there, if you don’t need to sell in the next couple of years, don’t
do it. I walked away totally relieved that they had decided to wait, because
there is no way I could sell his house for the amount he wanted in this market.
I don’t know if you all realize this or not, but when an
agent takes a listing, the agent pays for all the marketing costs. The brokers
pay for little or nothing. That means that when I take on a multi-million
historic home, I’ll be investing up to five figures in marketing costs, on the
belief that I can sell it and for the added exposure it brings. But if I
can’t sell it, I’m hosed. Any listing I take, spend money promoting, and
ultimately fail to sell is a business loss.
That’s why brokers yammer on agents to get listings. It’s no
skin off their backs because we front the costs and do the legwork. Joe
Public’s home might actually sell, which is the big win, but it also brings the
agent marketing exposure and maybe some buyers on the side. As long as agents
have lots of listings, at least half will probably sell since the national failure
rate was around 50% last I looked. Though in our market, I suppose you
could say it’s now 90% since only 10% or less of standing inventory is selling
Seller number two built a super-sized spec home in Somersett
with front-row tract home views across the canyon. In some ways it’s a very nice
home, but with notable flaws that any buyer in this price range would pick up
right away. There is no way this seller will ever get the high-two-millions
price desired, and I honestly don’t think breaking even is possible at this
point. I’m guessing this house will be for sale forever, if the seller can even
find a Realtor to represent it.
Which brings me to another interesting dynamic I’ve
encountered this week… gifting listings. At three separate agent gatherings I
attended, it became clear that since little is selling, sellers are beating up
agents all over town, and we are feeling the pain. There is also pain in the
pocketbook as we spend personal marketing dollars on homes that don’t sell.
That can’t go on for long. So the beaten agent who can’t talk a seller down to
a price that sells tries to salvage the situation by referring the seller to some
fresh meat… um, I mean, another capable agent.
As I look at my inventory and think about what to keep and
what should go, I see many of my colleagues doing the same. One top agent has
turned down more than ten listings this past month, while another halved the
print budget and allegedly bullies sellers into submission on price, which
seems to be working as this top professional still moves several homes a month.
Another agent offered me a two million plus listing that
will never sell and came with a bonus crazy owner, which I politely declined.
(Hmmm, she must really hate me.) And still another and I found ourselves one
night at the Whispering Vine, comparing notes on seller number two, practically
congratulating ourselves for passing on what would surely amount to an endless marketing
Turning down listings despite our brokers’ perpetual desire for more is
becoming common within the agent community, all a part of the natural
cycle. In time, as sellers can’t find anybody to list their homes (except maybe the
list-for-$500 discounters… man, I wish I had that option) they may begin to understand the need to lower expectations to get the sale, or simply wait it out.
In the meantime, I’ll be on the lookout for buyers. Notices of default are up, sales are off, inventory is up, so I’m thinking prices have nowhere to go but down. As a buyer, it’s a good time to be out looking, at least in research mode. Winter should be interesting.
And to my wonderful
contributors who didn’t even flinch at being likened to a dysfunctional family earlier
this week… I am asking you nicely not go off on those listings of mine you
think are overpriced. Bad business decisions will bite me in the end, so take
comfort in that. Enough said.