The great disconnect: Buyers and sellers debate price

Interesting survey from the firm HomeGain that suggests price confusion persists in the home market. In a nutshell, sellers think their homes are worth more than buyers do.

Survey participants also largely trashed the Obama administrations housing rescue scheme as expensive and ineffective.

HomeGain surveyed Realtors by region and provides these charts, numbers and comments.

Comments

[Paradigm Shift]

This seems like one of the "duh.." omnibus pork barrel ear marks government sponsored studies wasting millions to come up with a conclusion that everyone already knows :)

BTW, I do learn from the variety of sources you find on you blog posts James, keep em coming I'm not shooting the messenger here.

In a world where easy credit is no longer easily available to supplement actual job incomes.. this schism between sellers and buyers will continue until correction to income levels without reliance on supplementing with credit occurs. I'm empathetic with the sellers because they've been had but at the same time the buyers only have so much fixed income available without relying on the usual tricks pre sept ’08 (0% down, liar loans, lenders looking the other way and pushing through unqualified buyers to the next level, etc..).

Ignoring the global 50 trillion (with a T) crises we are under and layoffs climbing at a alarming rate.. The number of qualified buyers are further reduced and the amount they can afford is lower than what was just a few months ago.. the checks and balances are being enforced by lenders now.. they are being examined closely for what people can “actually” afford (neat concept I know, something new.. see Barney Frank / deregulation / unqualified buyers).

Those sellers that are over extended and checking out today because their income can't sustain their over commitments (see debt to income ratio) are left holding the hot potatoes and looking for help. In comes the government .. with a garden hose to fight a 5 alarm fire. This problem will be exacerbated and grow with the pending ARM adjustments, credit card interest rates rising over time, and inflation. Those that decided to budget based on aggregating multiple minimum monthly payments across credit cards, cars, and mortgage are going to be coming out of the woodwork with hands held out for some gubment stimulus cheese.

[Fuzzy Bear]

Sellers are still very much in denial in the Tampa Bay area. In fact, a common statement I keep hearing from potential sellers is that the prices will return what they used to be in a couple of years.

The longer the denial persists, the longer it will take for the inventory, including the "hidden inventory" or shadow market to clear.

[Fuzzy Bear]

"In a nutshell, sellers think their homes are worth more than buyers do."

Perhaps these sellers should take a course in supply and demand and study the impact of bubble markets that burst as it would be an eye opener for some.

"A home is worth only as much as what a person is willing to pay"

[Frank Lee]

P.T. Barnum aside...
You have to factor in necessity and probability. If you are talking about a "casual seller" then price isn't so much a function of a sales necessity. Naturally, the lower the price, the greater probability of a *faster* sale. It is up to the seller and, if applicable, their agent, to deduce a realistic price depending on the goals. ...taking into account a steep failure parabola in today's market.
It should also be noted to sellers that price is certainly not the only factor in the algorithm.
- Exposure
- Traffic
- Common Appeal
- Special Appeal

You can be priced "right" and still not sell if you didn't clean the place up before the showing.
You can be priced "right" and still not sell if your agent is not getting people in the door.
You can be priced "right" and not sell because you only had the place listed in the winter when few are looking. Your buyer *may* just be a matter of timing.

Still, you have to know when to take less.

Sure, anyone can argue that any issue can be conquered via price. (40% REO sales!) Are you in a hurry? Did you take the correct steps, hire the best people and provide excellent presentations?

Nonetheless, there always have been, and always be speculators and the ego/know-it-alls who will price unacceptably high...even with foreclosure staring them in the face. (ref. Tino's Tierra Verde condo mantra)

Stupid is as stupid does.

[charlotte nc real estate mediation]

This was going to happen the whole bubble just bursted.

[Tino]

A good chunk of the blame has to be leveled at the realtors, who continue to advise sellers to list their homes at ridiculous levels.

How do we know that they are ridiculous? Because no one will be able to get financing due to their premium over the comparables.

Want to have some fun? Ask a realtor how you can purchase the home they are trying sell if the appraisal comes in 25% low. Will they personally offer you a second mortgage for the difference?

[rob dee]

i've been watching the market for a long time now. the thing that puzzles me is that i don't think realtors are looking at what the competition is selling for. the discrepancies in price for similar homes in similar areas is huge.

i know of 2 side-by-side lots in odessa. identical in everyway. on is listed at $495k the other $250k. my realtor said it's a case where one is slightly overpriced and the other slightly underpriced. SLIGHTLY?!?!?!?!?!

considering that both places have been on the market for over 18 months i'd beg to differ. imo they're BOTH OVERPRICED!!!

would it be ethical/legal to email both the owner and realtor the details of similar lots in the area which are more competitively priced? i think some of them are in serious need of a reality check!

[Tino]

The fact that the lots are sitting there for 18+ months without a buyer is a reality check in itself...

I have a property under contract for a 2-story house on a 1/4 acre lot. A similar EMPTY lot a block away is on the market for more than twice what I am paying. The appraisal of the property showed the value of the empty lot to be 1/3 of the current asking price.

I leave the reader to draw their own conclusions about the listing agent's knowledge and abilities.