Silly Games and Pompano

November surf fishing in Cocoa Beach, hoping for a pompano.

Below is the listing history of a waterfront home in Cocoa Beach.

07/18/08	$1,199,000
08/25/08	$1,189,000
08/28/08	$1,184,000
08/29/08	$1,179,000
09/02/08	$1,174,000
09/03/08	$1,169,000
09/05/08	$1,164,000
09/14/08	$1,159,000
09/16/08	$1,154,000
10/02/08	$1,149,000
10/07/08	$1,143,000
10/09/08	$1,139,000
10/10/08	$1,129,000
10/24/08	$1,124,000
10/25/08	$1,119,000
10/27/08	$1,114,900
10/29/08	$1,109,900
11/06/08	$1,100,000
11/07/08	$1,090,000
11/08/08	$1,080,000
11/09/08	$1,070,000
11/11/08	$1,050,000

I’m not sure what the strategy is here but apparently the seller believes that there is a buyer out there who will make a move when the price hits the magic number. With such teeny price drops the seller is obviously afraid of selling too low but must have some motivation in selling unless this is just a crazy MLS experiment. After 22 price drops in 4 months without a sale, two things are obvious; the price is still too high and the seller is not serious about selling. I always investigate the current and previous listing histories of target properties before making an offer in hopes of getting some indication of the seller’s level of motivation. Much can be learned from these histories. My take-away from this particular history and the silly series of small price drops is that this seller is not realistic about the market and will probably be reluctant to accept well-researched comps and a fair offer. If you are trying to sell your property, I would advise researching recent sales and competing properties and to price your property at or just below what the comps tell you is fair market value. Don’t waste your time playing games like this seller if you really want to sell.

“Never play cat and mouse games if you are a mouse.”
_____Don Addis

 

Secret Agenda – Revisited

I first commented on the issue of agent bonuses back in Feb. 2006 and again in November of that same year. I’m revisiting that subject because of a conversation I had yesterday with another agent concerning agent incentives. In case you missed those two posts here they are.

[Nov. 2006]
Looks like someone else has been investigating the whole buyer’s agent compensation issue. The Wall Street Journal published an article this week by writers, James R. Hagerty and Ruth Simon, entitled “Do Real-Estate Agents Have a Secret Agenda?”

It was like deja vu all over again. If you’ve been reading this blog for a while, you may remember my post on Feb. 26 of this year entitled “Conflict of Interest”. In it I raised the same concerns that these writers addressed in their piece, sellers trying to subvert the process by offering sweet temptations. Rather than rehash the whole issue, I’ve repeated the post below. I’m not saying all bonuses are undeserved, but, I do think that buyers should be made aware of extra compensation intended to attract the buyer’s agents. If your agent goes above and beyond the call of duty, she may deserve every penny being offered. If it was an easy deal for her, she may be happy to rebate that bonus to you. Knowledge is power.

[Feb. 2006]
I’ve been thinking about agent bonuses and commissions for quite a while. As our market has slowed, we are seeing sellers offering higher commissions and bonuses, supposedly to get agents to push their properties. I received a postcard this week from a developer offering not only 3% commission but also a $1000 bonus to any agent bringing a performing buyer. (note from 2008: As the market has evolved since those posts, bonuses have gotten bigger.) This is troubling to me. It suggests to me that the seller offering the bonus thinks that I would steer my buyer to their property because I would make more money. Folks, if your agents are selecting properties to show you based on the amount of money that they will make, they need their butts kicked. This whole idea of paying a bonus to the selling agent seems to me to be a serious conflict of interest and an incentive to engage in unethical behavior. Without asking, a buyer may never know which properties are more lucrative for their agent, or, if they are even being shown all properties. As it stands, bonuses are legal and commonly offered. I’ll go on record as saying the practice has a foul odor to me.

posted by Larry Walker @ 9:43 AM

 

If condos were watermelons

How many legs does a dog have if you call the tail a leg?  Four.  Calling a tail a leg doesn’t make it a leg.  Abraham Lincoln

I am perplexed at the level of denial that remains in our condo market. You would think that after watching prices decline for almost 2 years that sellers would have gotten the message. I am negotiating on behalf of buyers on two different condos this week. In both cases, the sellers are clinging to the belief that their condo is somehow worth more than other recent sales in their building even when the other units were more desirable. Folks, it doesn’t matter that your neighbor sold low because he was behind on his mortgage. Nor does it matter that you need to clear X dollars or that Mr. Smith got $XXX for his unit last year or that you spent a small fortune on new granite and stainless. Mortgages are more difficult to get than just a month ago and every time a lower sale records, your unit is worth less. It’s unfortunate, but it is what it is. If you want to sell, don’t let a qualified buyer walk away because you have an irrational need to get more than the last comparable sale.

I grew up in watermelon country and every summer, the watermelon growers would set up roadside stands selling their melons. If farmer Ed priced his at $5 each and Farmer Cletus next door priced his at $4 , Ed had to match his price or watch his melons sit unsold while losing value until they were spoiled. As long as both farmers’ melons tasted equally fine, the lower price dictated the market. In particularly productive years, prices got really low when everyone had a stand with lots of inventory. I can remember 10 for $1.

The current condo market is like one of those productive years. The market is saturated with inventory and prices have retreated. Cling to the belief that you’ve got a $5 watermelon in a $3 year and you’ll continue to hold it while your neighbors who’ve responded to market conditions sell their’s. There is also the risk that, as more melons ripen, the price will drop to $2. At that point, the $3 you turned down looks good. As silly as it sounds, condos are like watermelons. Deny it if you dare.