My 3 neighbors are chasing the market down

[contraman]

Vrudny,

As I said, it is just my opinion. Obviously, you and everyone else here are free to treat others misfortune as you wish…..

I just try to put myself in others shoes and think about what I would expect from others during difficult and trying times in my own life….

Remember, pride always comes before a fall….it is a cycle in life just like Real Estate my friend….

 

Sincerely, Contraman

[powayseller]

Yes, compassion is needed, both for those fellow brave piggingtonians (hey, add that to Wikipedia!) who were teased for their early knowledge of the bubble and selling their real estate, and to those mass followers who piled in at the end, fearful to be left out of further gains.

Few people fully understand real estate cycles, so most pile in at the peak, and get out at the bottom. Just like the stock market, it is the individual investor who gets hurt. I remember too watching as people around me made fortunes in the stock market in 1999. I was a little envious. By late 2000, my envy stopped.

I blame myself for missing out on the real estate bubble. I have compassion for anybody owning a house right now; most don’t even know yet how little their main asset will be worth in a few years.

[4plexowner]

I went from being an employee (software engineer) to working as a contractor about 8 years ago.

Multiplied my income by 2.5x and no longer had to put up with employee bullshit like annual reviews.

[barnaby33]

I went to the Padres/Rockies game on wed and sat in the bleachers out in left field. I could see 3 unfinished condo buildings looming in the darkness just outside the ballpark lights. It was scary!

Josh

[barnaby33]

I worked at Stellcom for 3 years. It was painfull to watch it go down the toilet. I loved it when we were at Water Ridge.

Josh

[synchro]

If I were your neighbor #1, #2, or #3, and some busybody comes by and offer unsolicited advice, I’d boot that busybody off my property in an instant.

You may be right about the real estate bust, but it is none of your business to approach these people. It _may_ be a different manner if you’re close to these people and they wouldn’t mind your apparently expert opinion.

[powayseller]

Neighbor #1 is a friend, #2 is dead (estate sale), and #3 wasn’t there when I spoke with the realtor. However, thanks for defending my neighbors, as I am sure they are appreciative of your concerns, and anything that makes my neighbors happy, pleases me as well.

[Steve Beebo]

I think everyone can agree that prices in SD are going thru a downward trend – the difference of opinion is how much will prices drop from their peak.

In my opinion, prices aren’t going to drop as much as most people on this forum believe. In fact, I don’t think there are going to be that many people who time the market correctly, selling at or near the peak, who will wait 2-5 years, and buy at a low enough level to have justified renting for several years. Let’s face it, if you sell your house now, you’ve already missed the peak. Most neighborhoods seem to have peaked in the summer to fall of 2005.

Let’s say you sold in the summer of 2004. You may have missed out on a lot of appreciation over the 12 months up to the summer of 2005. Some areas jumped 15%-plus during that time. If prices drop 20-25% from the summer of 2005 until the bottom of the market, and you did miss out on the additional appreciation, you really may not have made that great of a move, considering an 8% cost to sell your house, and the cost of renting and moving. On the other hand, if you sold your house at or near the top of the market in your area, you’ll probably have made a good move, even if prices don’t take a huge dive.

I’m not criticizing anyone in particular who sold in 2004. My wife and I sold an investment property in 2004, and paid the capital gains – and looking back we’re glad we did.

[dalsik]

A question to powayseller about your 10%/5% overpriced rule.

You’ve mentioned that if someone has no showings then they are 10% overpriced, showing and no offers means 5% overpriced, and getting offers means the price is (obviously) just right.

I’ve been somewhat chasing down the bottom-end of the other 2-2 condos in San Carlos/La Mesa for the past 70 days or so. In that time I’ve certainly had a lot of showings — 20+ so far — but zero offers. So taking your rule into account, my $300,000 asking price back in late June should really have been around $285,000.

A couple of weeks ago I went down to $280,000 and got an additional 2 or 3 showings but no offers. Thinking further about your 10%/5% rule I instructed my Realtor earlier this week to get me down near the bottom of the barrel — $269,000. The thing is, there are still 2 or 3 “desperate” sellers listing at $249,000-$255,000.

Do you consider these low-ball types of sellers in your rules? Should I consider going 5% below them? That’d be $225,000? Yikes… over $100,000 of the highs of a couple years ago!

[powayseller]

dalsik, the 10%/5% rule is something I read on realtor Jim Klinge’s website .

He also writes that buyers will pass up anything with any hint of imperfection; they want the best yard, best location, not backing up to a busy street, etc. He also advises:
“1. Fix up the house the best you can.
2. List it for an attractive price.
3. Start lowering it within two weeks.
4. Keep lowering it until you find what the market will bear.”

Definitely check out his website, and if you are not locked into a realtor, give Jim a call. He’s one of the few good realtors out there: honest, understands the bubble, truly wants to help the buyers and sellers, smart, hard worker, and very nice.

[JES]

IMO you should ignore the 10/5% overpriced rule because it is purely arbitrary. What really matters is how you look compared to other actives, pendings and solds. In this market, if you ‘really’ want to sell, you’d better be significantly below the lowest comparable listing and pendings, and also well below any previous comps.

In your case, if there are 2-3 comparable homes listed at 249-255k and not selling it is clear that you are not the bottom of the barrel. In fact, you are priced 7% higher than your competition. If you truly need to sell, you should consider dropping well below those actives before they decide to go lower and cause you to continue chasing them down. There’s is hope that someone will consider you a great deal and bite.

[powayseller]

JES is right; why are you priced $20K more than the other 2-3 guys on your street? Your higher price would be a reason that buyers are passing you up. If they are also passing up the other 2-3 guys, then they are listed too high, also.

So here’s the situation: $249 is too high, but you price at $269. If $249K is too high, then $269K is also too high. What is the right price? Look at a recent comp, and subtract at least 2% per month. So for a May comp, subtract 10%. A realtor can advise you better, as I am just making guesses at the price drops. But you get the idea; find a comp, and then adjust downward depending on how old the comp is. And please, don’t chase down the market; you’ve got to figure out the market price today.

What you’ve got on your side is that you are in a perfect price range for a first time buyer. My neighbors are out of that price range: they have a first-time house at a middle-aged home buyers’ price, so their prognosis is horrible; I doubt they will ever sell until they drop to $300K. But your place is affordable to a starting family. Take advantage!

[dalsik]

The 2-3 other guys aren’t even in my zip code! My realtor is going to 92141 in addition to 92119 because of the lack of comparables in my neighborhood. Plus I’m having to deal with comps that in less desirable areas/streets/etc. We’ll see if I can grab some of those people who couldn’t afford my original price.

[SD Realtor]

dalsik have you done the following?

1 – Had your realtor actually take you over to the competition? You need to go into the homes and look at them. As many of them as you can.

2 – Have you reviewed or looked at the condos that have gone pending that you would consider again to be competition?

I believe there is substantial value in being the most price competitive property amongst your peers. However I think alot of people overlook adding value in addition to lowering the price. If you are willing to slash your price by 10-20k each reduction then spend 10k on the granite counter tops and stainless steel appliances. Put in the nice tile instead of laminate, etc…

The main point here is that you may need to push your realtor to get more information about your competition. This may be more work then just having the realtor send you the latest actives and pendings, you should go and see them. If you are paying 2/5-3.0% to you realtor to sell the home then they should be having the open houses, putting it on brokers tours, the whole shebang. That is why you are paying the commission right?

Have you also analyzed the solds? What was different about them? Be proactive and go over to the homes, knock on the door and ask if you can take a quick look around…

This may sound lame but taking steps like this will give you a more concrete feeling of what you need to do as opposed to sitting on the computer and hearing all of us say lower the price, lower the price. I don’t mean that as an insult, just some words of advice.

Lowering the price is good, don’t get me wrong, but there is more you can do.

[powayseller]

That sounds like great advice: look at the competition that got offers (pending and sold). Should you expect your realtor to go along with you on this investigation?

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