[quote=livinincali]The market right now is one where there is low inventory and lower sales. Sales were good in the summer but they are weakening with the lower inventory. You have buyers that aren’t willing to pay significantly higher prices and you have sellers that won’t sell for current market prices. It’s a standoff and it could be this way for awhile.
I don’t buy the over corrected due to short sales and other arguments, the fact is there wasn’t a buyer at the higher prices whether you think there should be or not. There’s either a buyer that will pay you your price or there isn’t. If your neighbor found a buyer at a higher price you have to find your own buyer at a higher price. You only need to find and convince one to pay your price. In essence find your own sucker if you want to sell above market.[/quote]
livinincali, the reason there aren’t many buyers willing to pay prices circa when the market was ~normal (read: unmanipulated <=2003) in many local markets is because they are so used to "fire sales" at the market's "new normal" that they expect they are entitled to “fire sale” prices, even on well-located non-distressed properties which have been maintained properly. Close to zero percent of distressed property today priced at a “fire sale” price or whose seller is willing to accept a “fire sale” price has been maintained properly throughout the years … if ever at all. Much of it literally needs to be gutted and could likely not pass a termite clearance. In any case, the (institutional) sellers will not pay for the costly tenting and repairs.
You pay for what you get in this life … nothing more and nothing less. The “sucker” is actually the buyer (who is hell-bent on getting a “fire sale” price) who buys an REO without a Transfer Disclosure Stmt (TDS) . . . or a SS WITH a TDS where the (indigent or bankrupt) seller(s) lied through their teeth on it and also to their listing agent in order to consummate the deal and successfully dump “their” underwater property. The “sucker-buyer” then ends up finding out AFTER closing exactly what they bought (at the “fire sale” price). Practically speaking, a LOT of these issues cannot be seen and/or their extent cannot be determined by a $400 “home inspection” in escrow.
In other words, if there is a distressed listing in an area which attracts a buyer who wants it for a personal residence (but is otherwise unqualified to purchase in that area w/o buying a heavily-distressed property), there is very often a good reason for its “fire sale” price. If said listing was a “traditional or equity sale,” this same “sucker-buyer” would not even be considering it, as it would be too cost-prohibitive.
A REIT getting a few of these duds in a bulk sale can recover from this pickle, due to economies of scale and being well-funded. However, such a revelation AFTER closing can be financially devastating to an individual buyer, ESP a highly-leveraged FT buyer and/or head of a family with minor children.
