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Sales in December 2008 were up 23% from the year prior. The under $300K range decreased its months’ supply of inventory by two months, as activity in the $300K-500K improved ever so slightly on most fronts. Mr. Toad’s Wild Ride continued in the $500K-1 million category, on the one hand improving by nearly doubling unit sales, as average price dipped 10%. The $1-2 million range took the holidays off with zero sales. The $2 million plus range had one sale at $2.7 million, a markdown from $3.6 million. Pendings increased, a little unusual for December, and again, nearly half were offered for under $200K. Properties under $200K continue to sell through with an average price of $144,025. Full report.
Data courtesy of NNRMLS, December 2008. Report includes Stick-Built Single Family, Condo/Townhomes, and Real Property Manufactured Housing in Reno-Sparks (Area 100).
Marla
I see the slideshow on the right hand corner of the blog of the multi-million dollar properties in Arrowcreek, Saddlehorn and Montreux.
Then I see that sales over $1 million last month comprised 3/10 of 1% of all closings.
Slight disconnect here?
Marla
50% of all the pending sales are for houses listed at $200K or less. I don’t know how many pendings fall out of escrow, but if this figure holds, and these escrows go on to close, then we are very close to the median falling under $200K.
Waldo
The owners of those Arrowcreek, Saddlehorn and Montreux houses are more screwed than they can even imagine. Mortgage rates are at all times lows and still nobody is interested in buying these whacko priced properties. Take away the bubble and Reno never was, and never will be, a multi-million dollar market. These houses will be on the market in 2015 with still no takers. I would love it if the owner of one of these overpriced alligators would come here and explain their thinking. How about it Amazing Arrowcreek? Come here and explain how your house is worth $1.6 million?
Riley
I too would be interested in hearing why this house is worth 8x the median. Iv’e noticed that while the median has dropped almost 40%, the asking prices of these houses have not dropped hardly at all.
GreenNV
Playing around with the pending numbers, 36% of the pendings under $200K are short sales, while 44% above $200K are shorts. That is starting to look statistically significant spread. I wonder if the percentages for the pending REOs by price range are similar? Also interesting to cross reference with Guy’s numbers, which had only 15% of December SALES being shorts.
BanteringBear
I was unable to look at “Amazing Arrowcreek” because the link did not work for me. However, I don’t think it’s even necessary in order to determine it is grotesquely overpriced. 8x the median says it all.
I think these sorts of sellers fall into one of two categories. Either they are trying to sell for what they owe, or they are greedy and delusional. There seems to be quite a substantial number of each out there.
It’s actually quite entertaining to watch some of these listings. Sometimes, along the way, there will be very chintzy price cuts in a vain attempt to draw more interest, as some have never even had so much as a showing. These work about as good as holding a piece of cheese out for a mouse. The rodents are smarter than that, and so are most homebuyers. Most of these listings will eventually disappear, or go into foreclosure.
Paso Robles Real Estate
I too would be interested in hearing why this house is worth 8x the median.
Martin
I see that this is Guy’s listing along with another Chase agent. It’s been quite a long time since Guy posted anything other than one of his “here are the numbers” posts. I remember when Guy used to frequently post about his unwillingness to take overpriced listings. Perhaps Guy would be willing to step out of his self-imposed exile and explain the pricing of Amazing Arrowcreek?
What are the recent comps that support the pricing? Perhaps we are uninformed. Guy?
BanteringBear
Interestingly, Zillow is showing the value of “Amazing Arrowcreek” to be less than $1.12 mil, more than $500k below asking. And, we all know that Zillow is always waay over on their Zestimates. The question is: do these people honestly think some sucker is going to pony up nearly double what the place is worth at this point in time? Seriously, this place should sell for no more than $850k (and I’m being VERY generous). Even Zillow is giving a range of $771k-$1,140k.
Move to Reno
In today’s market, “amazing Arrowcreek” is probably worth about $900k to $975k. It’s a nice house but if they want to sell it $190 a sq ft is reasonable given that other “boom” houses are selling at $100 a sq ft.
CHRIS
Here I am again, still looking for a house to buy. I wanted to keep you updated. I need more advise from all of you, yet again! I want to know why I feel that some of the houses I am looking at are not the same houses that are being priced. I think I am in Bizarro World. Point mls 90000738 on Lawry, nice area yes, but this house is listed at 199999. I looked at it and it is rough. I do not feel this asking price reflects the home. I am explained about “comps” in the area. Is this normal??
My other question…short sales. Any advise/opinion on these? I have several I like but the “short sale” scares me. From what I have read on this blog they are only 33% successful…is that correct? Should I try?
Thanks!
Chris
why this asking price . It needs fixing up, anyway
Sully
That particular property is owned by a MBS. The bank (US Bank) is the trustee.
Make an offer you feel comfortable with, it takes about 3 days for them to get back to you. They have to past the offer on to the owners, who is probably some Wall Street firm.
Right now “comps” are only a ballpark number, as the market is constantly going down. Don’t expect to pay 150K in an otherwise 400K neighborhood, but this one might go for around 160 -170. Who knows.
Are you using a realtor? If you are, then it doesn’t sound like you’re getting all the info that you should be.
Short sales can take 60 days or longer to close, sometimes they don’t even accept or reject for 60 days. Buyers walk, that could be one reason for the low success rate.
CHRIS
Sully, thanks for the insight, yes I am using a realtor. I was just a little surprized he did not suggest low balling on this home since it was in some bad shape, but since I am not wise in these ways, I shrugged it off.
I think I am going to try a short sale, we will see how it goes, I do have time. I understand the 400k vs offering 150k, I do not want to be unfair, so I am not even looking at houses with the asking above 200k, this way I think I can stay in my price range. I could never afford those higher areas, so I jusy stay away. Why look at what you cannot afford right….
My hats off to all of you who take the time to answer back and write your opinions on this blog, it has helped me more than you will ever know.
Chris
ditz
Chris-
Assuming you are a bonafide blogger, you may (seriously) consider getting rid of your present Realtor and bypass the short sale nonsense. There are hundreds of REO’s for you to buy out there. You may want to do some of your own homework on the comps and familiarize yourself with the neighborhoods your interested in buying. Sorry, but you may not hear the full story from a Realtor or a buyer. These are somewhat desperate times. Pay attention.
BanteringBear
Chris-
Ditch that agent. You’ve provided enough info to illustrate they are NOT working in your interests. There are precious few “buyers” agents who will go to bat for you. The higher the selling price, the more money they make. This is the problem with the industry.
Move to Reno
Read a book about (1) home construction and (2) how to inspect a house. Price the home on square footage (not including the garage). That way you have a gauge to compare different houses. Shoot for about $100 a sq ft. for a quality, move in condition property. Evaluate the siting of the house relative to compass. You probably need to look at least 25 houses, 50 to 75 would be better. Don’t be in any hurry. Don’t trust your realtor unless you have a very good reason to do so. They are basically sales people looking to make an easy sale. Make offers on short sales as long as you have final ok on the transaction (right to cancel). The realtors I have talk with refuse to do another short sale having doing one and I would only do one if it would be the steal of the century. Right now there are plenty of houses available so be very picky. You want a house that was well maintained, that has no serious structural problems, and no major repairs looming like the roof or A/C unit. Visit the neighborhood at night. If possible, talk with the neighbors about any problems or concerns.
CHRIS
thanks for all the input, that is why I trust this blog! Great ideas, I have ditched the short sale idea. What is interesting is the sq ft issue, I like that idea. I will offer what I am comfortable offering, and I will not trust the agent. Thanks! I will keep you all updated!
Chris
3 Wombats
Chris –
FIND A NEW AGENT!!!
smarten
Chris, if you will not trust your agent, you need to find one you can. Think of it as shopping for a doctor, dentist or lawyer. I think in this market you need the advice of someone knowledgeable. Good luck.
DonC
smarten — I saw your post about making an offer on an Incline house to celebrate the bottom of the market. 😉 But I didn’t see a follow-up. How did that work out?
smarten
DonC –
The asking price was $1.388M.
We offered $988.888K.
The seller countered at $1.295M.
We chose [w/no regrets] to continue looking and renting – didn’t even counter-the-counter.
The home has been on the market for four months; it has gotten a ton of showings; yet our offer was the first.
Actually what I wanted to do [which my wife wouldn’t let me], is counter with a provision that if the home didn’t appraise for the sellers’ $1.295M sales price [given our offer was contingent upon purchase money financing], the sales price would be automatically modified to whatever the appraisal turned out to be [kind of like exercising an option to purchase where the purchase price is determined by an agreed upon third party]. Given one IV SFR sale took place in November; two in December; and, one so far in January; I’m pretty confident the appraised value would be far closer to our figure.
But when you’re a delusional seller represented by a delusional agent you get to learn the hard way.
CommercialLender
Smarten, InclineJJ, et.al.,
What are your thoughts on the Truckee market, if any? I see a ton, something like 700 MLS listings, with the word “Truckee”. Many (125ish) are Old Greenwood or other fractionals, but the remainder stikes me as a total train wreck for such a small town. I see entire developments like Ponderosa Meadows (19 new units, only 3 ever sold, no sales in over a year), Timber Creek (new, 30 of 34 are bank owned, never sold), etc. just sitting and sitting with delusional values from both realtors and the owners.
My wife and I, if you recall on this blog, want to pick up a decent 2nd home for use with the kids for the next 2 decades so we are circling like vultures trying to decide which carcass to feast on.
inclinejj
Commerical
I don’t know anything about the Truckee Market..If you need an agent over there I can refer you to a friend of mine..
I know the condo complex up the street from the 7-11 was foreclosed on also..Can’t think of the name..
BanteringBear
IMO, it is WAY too early to buy in Truckee/Tahoe. I had a friend buy a very nice house (I think it was a one off) in 2000 in Truckee (not downtown, but on the outskirts). He paid $140k for a place on 1/2 acre which needed the den finished, and a few other finishing touches. I believe even better deals will be had in the future.
BanteringBear
Smarten-
I believe it was a great decision on your part to not even respond to the counter offer. Should the house still be rotting away on the mls in several months time, I would recommend making another offer at a minimum of 10% below the original offer. They may quickly wake up to the current situation and accept it.
DownButNotOut
BB (and Smarten)- sorry to always be your arch nemesis but I was always taught NEVER to walk away from negotiations, assuming of course it’s something you wanted in the first place. ALWAYS make them stop communication. After all, if you stop you NEVER KNOW where the line is. Is it $100 more, $1,000 more? Is your offer the only amount you’re willing to pay? Make them set the price.
Right now the only thing you know, Smarten, is they didn’t want you’re offer. What you gave up is the knowledge of where they draw the line. Instead you drew the line. That’s just been my experience. Who knows, maybe they thought they had a live one and really were willing to negotiate?
Move to Reno
DBNO, thanks for that bit of negotiating advice.
ditz
Unless your just “testing the water” always nudge back a little and see what their bottom line is. In some foreign countries, you haven’t reached a seller’s price point until they are throwing you out of their store. And, on occasion, have chased me down the street, only to begin negotiating at the new lower price. We Yanks have much to learn.
smarten
BB, you’re NOT my nemesis. And I appreciate your input. Better yet, I appreciate the tone of your comments. I think your New Years Resolution is working [good for you]!
IMO actions speak louder than words. My alleged low ball offer sent a message far deeper than the amount. And so did the sellers’ counter-offer.
If I wanted to “revive” negotiations, it would be pretty simple on my part [in fact, even you recommend I do so IN SEVERAL MONTHS]. And vice-versa. At this stage I have less motivation than they so…
Also two other interesting things happened yesterday in the Incline Village market. A very, very top of the line, newly constructed, low elevation, Lake view property that has been on the market for over two years [and in foreclosure for more than six months] closed escrow. When this property first came on the market, it was priced in excess of $4M. The final sales price was a little over $2.6M and the price/square foot ended up being a quite reasonable [by IV standards] $379. IMO this sale IS going to set the standard for future IV sales, at least for the next several months.
To put my offer in perspective, the subject property is 18 years old; needs work; and my offer represents a purchase price of $310/square foot. So I don’t think my offer was out of line.
The second interesting thing is our friend Don Kanare’s daily update: four “properties…went into [notices of] default this week [and they are]…owned by an appraiser, a mortgage broker, a contractor and a real estate agent. This is the first time [Don] ha[s] seen more than one notice of default in any particular week where the properties [a]re owned by people who live and work locally.”
Independently I have my eye on three high end SFRs owned by a local agent. All three have been on the market for many months; simultaneously they have been for rent on craigslist for many months; on Tuesday the sales prices on two of them were dropped [again]; and, it’s only a matter of time.
It looks as if the IV market [as opposed to some remaining kool-aid toting agents] is starting to come to grips with the reality that we’re really no different than any place else. Surely Montreux and Arrowhead can’t be far behind.
BanteringBear
What’s lost on some posters here is that, by Smarten simply walking away with no counter offer, he has effectively pushed back very hard in the negotiation. There is no more lonely a feeling for a seller than having an offer in hand, in this dismal market, only to counter to no avail. Nothing but crickets. The “what-if’s” will render them sleepless. Let ’em marinate for while, Smarten, then hammer ’em again, at a much lower price.
BanteringBear
“The second interesting thing is our friend Don Kanare’s daily update: four “properties…went into [notices of] default this week [and they are]…owned by an appraiser, a mortgage broker, a contractor and a real estate agent.”
That is very interesting, indeed. It sounds like another case of people buying what they couldn’t afford. This bubble produced masses of fake “homeowners”, “buying” into areas they had no business living, and could ill afford, no matter how inflated (temporarily) their income had become. Just look at their job titles. Yawn.
PS- thanks, Smarten. I’ve had a few slip ups in my resolution, but am making an effort. I do enjoy hearing about your negotiations, so please continue to post. I love Incline Village, spent much time there as a child, so it’s interesting to hear first hand reports from the ground. Good luck!
Move to Reno
BB wrote: “What’s lost on some posters here is that, by Smarten simply walking away with no counter offer, he has effectively pushed back very hard in the negotiation. There is no more lonely a feeling for a seller than having an offer in hand, in this dismal market, only to counter to no avail. Nothing but crickets. The “what-if’s” will render them sleepless. Let ‘em marinate for while, Smarten, then hammer ‘em again, at a much lower price.”
On the other hand, the sellers might think that the potential buyer was not really interested in the property since there was no buyer counter offer. Hence, no strong push-back in negotiations since they never got under way. I doubt that the sellers are losing any sleep to “what-if’s” if they never would sell at the initial offer by the buyer.
I suspect that there are quite a few folks who make their best offer at 75% of the asking price, and they make it with a take-it-ot-leave attitude. If it’s not accepted, the seller never hears from them again.
BanteringBear
“On the other hand, the sellers might think that the potential buyer was not really interested in the property since there was no buyer counter offer. Hence, no strong push-back in negotiations since they never got under way.”
The idea that a seller would think that a qualified buyer, in this market, offering $988k is NOT serious is absolutely absurd. We are talking a million bucks here. You really are stretching, Move to Reno.
Move to Reno
Fact of the matter is that smarten offered less than 75%. I agree with you that it was a serious offer, but we are talking about the psychology of the seller when there was no respond to the seller’s counter offer. I know that my response would be that smarten was a low-ball player and leave at that. Certainly would not be pacing the hallway at 2AM worrying about my counter-offer.
CommercialLender
You all have great and thought provoking points on negotiations, though opposing views to a degree. Great discussion.
The buying/selling process itself always involves give and take, but when the pendulum swings to one side – buyer side today – an interesting disequalibrium dynamic takes shape. Namely, buyers have so many choices in the market they can both afford to wait it out and they can feel justified in a lowball. A counter offer from a seller in essense tries to equal the playing field or garner some negotiation leverage. But there is no standing for an equal playing field at the moment. So, by walking away without a response, the buyer is perfectly in his right to do so and a savvy seller should humbly recognize this dynamic. It is up to the seller to come chase after Smarten here, and he/she is a fool not to do so in today’s market. Again, in today’s real estate market, seller does not equal buyer.
This is exactly why “us Yanks”, as Ditz said, have redefined the world of commerce to that of a better place. We’ve created a disequalibrium in the buy/sell process by having an advantage, namely a transportable, ‘valuable’, liquid currency that is more desirable than the goods being bought which are non-transportable and less liquid. They have less utility than cash, thought they are in demand by certain buyers.
If it were not the case, you’d have a barter system whereby a ‘seller’ of goods would accept other goods for the trade. We don’t have this. We have people with cash offering this cash for goods and sellers of goods accepting this payment for their goods – but don’t confuse this for an equilibrium, as otherwise I’d have cash on a card table out front and offer to sell it to someone for cups of lemonade.
This is why, Ditz, the American economic system even with its flaws is far superior to the vast majority if not all foreign countries. Have you ever envied living in a country where ‘haggling’ is the norm? Usually they are 3rd world countries without compare to the USA.
So, Ditz, not trying to pick on you, but I’m sick to death of the ‘enlightened’ crowd to include many of our own, and France and middle easterners, et.al., telling us that WE have much to learn.
So, sellers, if you have a buyer with cash, think twice about how you respond.
Sully
I have to agree with smarten. I think his offer was very much in line and the counter offer by seller wasn’t low enough.
It seems the seller paid 700K for this house in 1992; he had some room to come down more than 7%, if he really wanted to sell. Perhaps he is the one testing the market at the expense of the realtor.
DownButNotOut
I think it was a big waste of time if you’re not even willing to counter your offer after the seller does. At the end of the day it was just an exercise. Your still looking for a house.
smarten
One more point on our offer. It included a disclosure that I was submitting multiple offers on multiple properties so if the sellers accepted our offer, it was contingent on our NOT having entered into a contract with someone else – i.e., we’d have to accept the sellers’ acceptance.
When the offer was presented I am informed the selling agent commented, “Oh, they’re submitting multiple offers?”
The reason I mention this fact is because of CL’s statement that “it is up to the seller to come chase after Smarten here, and he/she is a fool not to do so in today’s market.”
Actually, I’m not so sure it’s the sellers who are fools. I suspect it’s their agent who I’m certain gave her opinion of the market; classic ChaseNation spin.
So we’ll see. And I think you’ve correctly identified the property Sully [not that it was some big secret given there’s only one SFR on the IVMLS priced at $1.388M].
smarten
This whole episode raises what I find to be another interesting issue.
There are a number of travel web sites out there that allow people to share their experiences in bidding – especially insofar as Priceline is concerned. Knowing what Priceline accepted for a hotel room can assist greatly in your submitting an offer for another.
There are a number of telephone web sites out there who identify unknown callers. Typically you receive unsolicited spam from someone, you share your experiences on the web, so people will have some clue should they too receive similar calls. Kind of exposes those attempting to hide behind one of those “out of the area” caller ID calls at about 7 P.M.
I’m suggesting it might be interesting to create a similar site for Reno/Sparks/Incline Village real estate – you know, offers on listed properties that weren’t accepted. Buyers like me would share the nuts and bolts of their experiences with a particular property, and it would then be preserved for eternity on the web so that the next buyer who came along could make an educated offer. In my case, it would be a shame, wouldn’t you agree, for someone else to come along and offer these sellers more than $1.295M? So what do you think?
BanteringBear
Interesting idea, Smarten, an archive of all unaccepted offers for Reno/Tahoe houses. It would be a great resource for prospective buyers.
The early bird seldom gets the worm when it comes to low-balling. They typically act to soften up the sellers, exposing them to the market realities. A lot of times the sellers will end up selling for that price or less, caving to market forces.
I think I pointed out on this blog 2 years ago when 2635 Burr Ct., the same property which is now in foreclosure, was listed at (if my memory serves me) $635k. There was an offer of $599k which was rejected (not really a “lowball”). It then sat on the market for more than 6 months, and sold for $499k. They missed out on more than $100k. In fact, I want to say it was even more but it’s been so long my memory is foggy. Snooze you lose.
DonC
smarten – Thanks for sharing your experience. I think your idea about negotiating is a great one. I’ve used something like this when buying a car (yes different I know) and it worked very well. Again, thanks for sharing. It’s very interesting to hear how this worked out for you.
One aspect of the price game is that you have to think as hard about interest rates as you do about the price of the house. For most people the issue is the monthly payment, and that is affected by the interest rate. Right now what we’re seeing is quite atypical — declining interest rates AND declining prices. For example, a house that costs $1.2M @ 4.5% will entail the same payment as a house that costs $1M @6.5%, an historically attractive rate. You’d expect that with rates moving this quickly downward you’d see housing prices moving up, but we’ve seen the opposite.
This has implications for both buyers and sellers. Interest rates are unlikely to remain this low. Sooner or later they’ll start moving back up. As they do, house prices will be depressed.
What does this mean? Well, if you’re a seller it suggests that “waiting for the market to recover” may prove a very long wait. As the economy recovers so will interest rates, and as interest rates move up the price of your house will move down. If you are a long term buyer it doesn’t matter that much. But if you’re a buyer who plans to resell it means that even at a bargain price may not prove so much a bargain if interest rates recover and the price of the house declines further.
NVMojo
As much as we wanted to finally buy a home in REno after selling our home in northeastern Nevada 2.5 yrs ago, we just signed another one year lease. This time we wil be in a large, beautiful home that, hopefully, won’t foreclose while we are renting.
Governor Jim Gibbons made our state sound like a crap hole last night. Why invest with there is so much negative going on? Someone should put a cork in that guy’s mouth, a very large one.
Move to Reno
DonC, good point about the relationship between house prices and interest rates. However, I’m not so sure about how long our interest rates will remain down. After the Japanese real estate bubble popped 18(?) years ago, their interest rates went to almost zero and have never really recovered.
smarten
NVMojo states, “just signed another one year lease. This time we will be in a large, beautiful home.”
So just out of curiosity and if you don’t mind, how large and beautiful, and what’s the monthly rent [I’m guessing a lot less than $1,950]?
Thanks
ditz
Whoaaa!!
Take a look at 2975 Stonebridge Trail (Arrowcreek’s Granite Pt). Just listed @ 500K.
Either it’s a typo or the seller AND agent have been reading this blog.
GrayGeekNV
Hello All,
I’ve been reading this blog for a while now and would like to ask for some help on a property we are considering to make an offer.
The property is located in Mount Rose Estates at 5340 Biarritz Court,asking price is $544,900, 4 Bed, 3 Bath | 2,954 Sq Ft on 1.18 Acres, MLS ID #80018985. It’s a bank owned property on the market for about 41 days.
Based on what I read here a low-ball offer makes good sense, but how does one figure out what “FMV” is for this property in this market.
I’m not excited about buying a declining asset.
Any suggestions or comments?