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Sunday, July 20, 2008

A foolishly set jaw

We have unfortunately all been the victims of a President with a foolishly set jaw, on the war, on medical research and on many other topics that have caused the nation and the people great harm. Luckily that will change shortly and history can deal with him.

In the local real estate market there are many would-be sellers who have adopted a similar approach - "I don't care what the market is doing, I'm not going to give my house away!" How often have I heard that in the last couple of years. Usually these are the same people who burn through 4-5 Realtors, complaining all the while that they aren't doing enough to sell their overpriced house.

You can see the impact of having a number of people in a small local market all setting their jaws against the wind of the market. If you go to my Web site - http://www.themilfordteam.com/ - and look at the Real Estate Market Statistics page, you will find a couple of very telling charts. One tracks the Days on Market and Inventory for an Oakland County area that I focus my listing activity upon - Milford, Highland, Commerce, White Lake and West Bloomfield. Another charts the markets of Brighton, Marion, Genoa, Highland & Oceola and Howell Townships in Livingston County.

If you look at the chart for the Oakland County market you will see one price bracket that literally goes off the chart - the $400,000 to 500,000 market in Milford Township. There a few "sellers" have set their jaws and the Days on Market is now closing in on two years - 522 days. In the Livingston market the $300,000 -400,000 price category is now at 651 days.

So does this mean that it would take you that long to sell, if you had a house that should be priced in that range? Not necessarily. What it means is that there houses in those price ranges in the the two markets that are probably not worth what they are priced at and they are just sitting there. The sellers are being stubborn and refusing to lower the price to match the market, so they sit. And they will continue to sit for the foreseeable future. The market is cruelly efficient at sniffing out these overpriced houses and ignoring them.

How or why does this happen? I can only relate about the ones that I have some knowledge. Owners often put too much money into "improvements" - a new roof or a new kitchen right before putting it on the market that they then try to get back in the price. Often the "improvements" were nothing more than getting caught up on delayed maintenance (the roof or painting or finally replacing that leaky hot water heater) and involve things that no buyer is going to give credit (or extra money) for in this market.

Often these seller will point to some house that they think is similar to theirs and tell me that it sold for $50,000 more only a few years ago. Or they will quote some relative who lives in another state that their house is worth so much more than I have advised them to price it at. When that happens, if I'm smart I say thanks but no thanks and walk away. That person isn't likely to be a reasonable client and I just don't need to spend hours arguing with my own clients.

So, if your house has been sitting on the market for months and months and maybe you've even gone through 2-3 Realtors, ask yourself, "Do I really want to sell?" If the answer is yes, then resolve to listen to your Realtor the next time they advise you on pricing. You're not going to get what you wanted in this market. You're going to get what the market thinks your property is worth. If that doesn't work for you , then get it off the market. Letting your house languish on the market just marks it as a problem house, even if the problem is you.

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