Question: "Well, having found our feet in Monmouth Country and a much better idea of where we want to live (and more importantly, where we don't want to live), we've really narrowed down our geographic search. But, my question to you is, "Are sellers being reasonable?" I know that not all sellers listen to their real estate agents and thus we see the property sitting on the market for a long time - do you think they're more reasonable now? What "give" if any are you seeing from the asking prices these days?"
Lost In Relocation, Home Buyer
Tinton Falls, NJ
My response: I can certainly understand your frustration in this market and I think it is shared by sellers, buyers and real estate professionals alike. At issue, I believe, is the perception of where & when the "bottom" of the market will find us.
I think those people (both buyers & sellers) who have a clear understanding of where the market is right now are certainly more realistic about values, but many buyers are looking to a future "imagined" bottom of the market when values may (or may not) be lower. Many of these buyers feel the pricing should be a whole lot lower. Likewise, many sellers have already discounted their prices -- in some cases perhaps not quite enough -- and feel justified in holding firm to their price. In many cases this creates a 'stalemate' situation where no one wins.
Lately I find most buyers are looking for a deal (some will even say a "steal") and while it's understandable that they want to save money, it's not necessarily sufficient justification for sellers to make that happen. It all boils down to motivation: a seller who is in financial distress or sufficiently "fatigued" by the market may agree to a price that would not have been acceptable previously, now they may accept a price that's lower than what they believe to be fair... otherwise many decide its not worth selling and hold firm in hopes of a better offer. Similarly, if a buyer "needs right now" to find housing they may be inclined to pay more than they originally anticipated rather than wait.
I do know that you can't judge this market with any blanket assumptions about value and pricing. There are actually, right now, many homes on the market that are very well priced and demonstrating real value. For instance: I have a listing in Fair Haven that has reduced their price 30% (!) since originally entering the market, a home in Rumson that has reduced over 20%, a home in Red Bank reduced over 35%(!)... I believe that these and many other sellers are being more than reasonable especially given that forecasters such as the Otteau Valuation Group, a well-respected appraisal consulting firm in NJ, are saying that Monmouth County will probably have experienced an average 25% reduction in value from the height of the market (Aug 2005) until we reach "bottom." Many homes are already priced in such a way that they "should be" generating offers... but many are not.
Frustrating to say the least.
What does this mean to the current buyer who is ready, willing and able to make a purchase?
- Work with a good agent who will be able to provide clear guidance on which homes are well-priced and are reflective of the current market.
- Understand that with current mortgage rates the overall savings right now are extremely attractive... once rates increase, which they certainly will, you're very likely to lose more in interest payments than in any future price reduction you may be hoping for.
- Get creative with your offer: many people think its all about price but there are many other effective negotiating strategies that help both buyer & seller feel like they're getting a better deal (e.g. mortgage buydowns can be very effective albeit confusing to explain...) Discuss these with your agents.
All in all, make an offer if you like a house. Sounds pretty simple but many buyers are not taking action despite finding homes they like. You may not get it for the price you want but at least you'll know and be able to move on to the next one.
Good luck with your search!
Questions? Ask away!
