Bay Area Home Values Retreat 20-Percent

What goes up must come down.

It's an old saying, but true.

The Tampa Bay area saw soaring home prices duing 2004-2006, but now gravity has taken hold and prices are falling back to earth like a rock.

Home values in the Tampa Bay area have dropped 20-percent between May 2007 to May 2008, according to the just released and much respected S&P Case-Shiller home price index. This means that a home with a true market value of $300,000 in May 2007 is now valued at only about $240,000. This puts housing prices back to January 2005 levels, according to Case-Shiller.

The price declines, according to the report, may be slowing. The drop in the Tampa Bay area for April to May was 0.8-percent as compared to a dip of 2.1-percent for March to April. That's good news for area home sellers, but it is a bit like being shot with a smaller bullet.

The problem is not just a local one. All twenty cities in the Case-Shiller study had annual price declines. Phoenix, L.A., San Diego and San Francisco all had price declines of 20-percent or more.

For more information on real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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eBay Is Not A Real Estate Broker

Desperate times require desperate measures.

eBay is about the most desperate of all measures. At least, for selling real estate.

According to the St. Petersburg Times, a small but apparently growing number of real estate sellers are resorting to eBay, the famous on-line auction site, for promoting and selling property.

Most of these sellers have had no luck locating buyers using traditional methods and find themselves in dire financial straits making monthly payments on property they can no longer afford. So, they turn from traditional marketing methods to the world of on-line auctions in the hope of finding a buyer somewhere in the world.

I know a little something about eBay and who successfully buys and sells on it. Just for the fun of it, a friend of mine and I own a little side company that from time to time offers items on eBay. We sell popular items, things that should be in high demand worldwide. We offer these at prices well below retail and just slightly higher than wholesale. We rarely sell anything. Why? Most likely, our "buy it now" prices remain too high for the bargain hunters haunting eBay.

eBay is home to buyers looking for a bargain. Let's be very clear on this matter. eBay, and probably most other on-line auction sites, cater to the great deal. If what you are selling is not a bona fide bargain, most likely you are not going to sell it on any of the on-line sites. A mere good deal just won't cut it. It has to be a great deal, a super bargain, a value for the ages. That's what buyers are looking for when they go to eBay to buy anything, and trying to sell real estate for market value is not what buyers will consider a super-duper-lollapalooza deal.

Frankly, if you were to put the property down at an eBay kind of price and run some local advertising, most likely the property would draw offers and get sold using traditional marketing methods.

If you think you are going to sell the property at current "market value" on eBay, well, I think you should re-think your pricing premise because eBay is not where you generally find those kind of buyers.

Oh, and if you think eBay buyers are not familiar with your local market prices for real estate, you need to re-evaluate your thinking. The internet has opened a world of real estate pricing guides to buyers worldwide. Before they buy anything, those price-conscious eBay buyers have checked the comparative value of your property versus others in your neighborhood. They may have a pretty good idea as to your property's true market value, and they are not going to have the wool pulled over their eyes.

In the off-chance that you actually find a buyer on eBay, the seller still must open a negotiation with that buyer. There is more to selling real estate than just agreeing on the price. Ask any full-time, professional real estate agent about getting a contract completed and they will tell you that deals are often lost due to the "terms and conditions" of the sale. Many times people agree on the price but absolutely can not agree on terms. With eBay, all you get is an expression of interest in purchasing at a certain price. You still have a long way to go before you actually have a written, signed contract upon which to move toward a closing.

The St. Pete Times story says very clearly that "... most sellers don't have any more luck on eBay than they apparently had elsewhere." I think that's because of the kind of buyers that access eBay. For the most part, they are looking for mega-bargains.

If you want to sell your property at a bargain price and are in a financial position to do so, then eBay may be the place for you. But if you would like to do a little better than that, I suggest you concentrate on pricing your property at a competitive price, do a lot of marketing, use patience and sound judgement, negotiate in good faith, and recognize that we are in a strong buyer's market. These days, that's the way to get the property sold for the highest possible price.

For more information about real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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An Oversimplification Of Selling Houses

Logan D. Mabe has written a short article which appeared in the St. Petersburg Times' BayLink section on Saturday, July 12. Mabe's credits indicate being a freelance writer and a licensed real estate agent in St. Petersburg. To my knowledge I've never met Logan Mabe as a real estate agent or as a writer. I'm purely objective in my comments about Mabe's article, or as objective as I can be.

So, believe me when I say Mabe's story entitled "You CAN sell your home" is a well-written piece advising sellers that despite the rather sorry state of the real estate market today, houses can be sold based on a formula that emphasizes location, condition and price.

I advise every seller of real estate, be they a property owner or real estate agent, to get a copy of the Saturday Times and read Mabe's story. The advice is excellent and should be followed closely.

That said, the story does not go far enough given the complexities of today's marketplace.

Mabe did not include what I consider to be two other very important keys to successful selling: marketing and seller motivation.

Marketing

There's an old saying in marketing: "You gotta tell 'em to sell 'em". Nowhere in Mabe's story is the word marketing ever mentioned.

The simple fact is that if people don't know a property is for sale, nobody's going to inquire about buying it even if it is in a great location, excellent condition and is bargain priced.

Lack of marketing is one of the biggest problems faced today by non-represented sellers (FSBO's) and by many listing agent's who simply do not know how to do a proper job of marketing and do not have access to effective marketing tools.

Many real estate agents today don't understand the need for marketing, and others won't make the financial investment on behalf of their client to pay for the necessary advertising and marketing materials. More and more, marketing is the reason sellers list their properties with real estate agents. Frankly, if an agent is not willing to do the marketing they should not accept the listing because they are doing the seller a grave disservice. Now you know where I stand on that little ethical matter.

I've written many times in this blogsite about the need for comprehensive marketing programs in selling property. It is essential that an investment in marketing be made to drive prospective buyers and agents to inquire about the property. Perhaps Mabe doesn't understand the need for marketing, or perhaps the subject could not be mentioned due to space limitations. I hope space limitations are the reason.

Seller Motivation

A motivated seller will do the things needed to sell a property. An unmotivated seller won't do them. Motivation was a word not mentioned in Mabe's story.

There are way too many unmotivated sellers with property for sale today.

It's easy to spot an unmotivated seller. Eventually they always say something like "I won't sell below (insert number)" or "I won't negotiate based on condition, sell it as is", or "I have to get an ROI of (insert figure)". Those are dead giveaways that the house is probably not going to sell soon in this buyer-driven marketplace.

An unmotivated seller is likely not going to do many of the things necessary to sell a property in today's marketplace. Keeping the price low in the face of falling real estate values, not making an effort to keep the property in A-1 showing condition, not investing the money necessary to properly market the property, not following the good advice given by their real estate professional -- these are sure signs of a lack of motivation on the part of the seller.

Other signs of an unmotivated seller? How 'bout these phrases which are all too familiar to those of us in the real estate business: "I'm in no hurry to sell", or "We don't have to move", or "I'll sell when I get my number" or "We'll just rent it until the market improves". Hogwash. If you want to sell the property you have to sell it within the context of today's market conditions.

In short, I wish Mabe had written a few well-chosen words telling sellers they have to be motivated to sell and do whatever it takes in today's buyer's market to get their property to the closing table.

Other Selling Challenges

There are probably a few other things I could write about that were left out of Mabe's story --like problems with taxes, insurance, mortgages, job security, gas prices impacting sales, credit issues and others -- but this is a blogsite not a seller's manual. I really liked Logan Mabe's story, but I thought it was an oversimplification of the problems sellers and agents have to overcome in today's marketplace.

For more information about real estate in Pinellas County, visit my website at http://www.thestpeterealestatesite.com/.

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What The Absorption Rate Really Shows

After posting June's sales report, I received an e-mail from a reader who asked what the Absorption Rate (AR) really means to him as a seller. If he doesn't understand what the AR means, I guess others have the same problem. So, here's what you need to understand about the apparently confusing AR.

AR is the inventory turn. Almost every good retailer I know wants and needs to know how quickly he will sell his existing inventory so he can keep his goods fresh and always have an ample supply of product on his shelves for customers. He needs to know how long it will take, on average, to sell all his present supplies of each product. This also helps avoid being overstocked.

Same holds true for real estate. The AR tells us how long it will take to sell out of houses or condos. In other words, it tells us what our current supply of property really is.

This past month, the AR for single family homes was 7.3 percent in Pinellas County. In other words, we sold 7.3 percent of all the houses that were in the MLS system during the month of June. If you were to project that over time, it means that it would take 13.7 months to sell all the houses in the MLS system. This is calculated by dividing 100 by the AR. Essentially, real estate agents and sellers now know that there is currently a 13.7 month supply of single family homes in the overall MLS inventory given the current rate of sales activity.

Same for condos. The June AR for condos was 4.5 percent. This means that at current sales rates, it will require 22.2 months to sell the existing condo supply. That would be 100 divided by 4.5. So, there's almost a two year supply of condos currently in the MLS system given June's rate of sales.

The real estate market is said to be "in balance" when we have about a six to nine month supply of inventory. The exact "in balance" figure kind of depends on who you talk to. As you can see, we have a long way to go before the market gets back in balance -- and that's assuming no new property comes onto the market.

For more information about real estate in the Tampa Bay area, please visit my website at http://www.thestpeterealestatesite.com/.

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June Sales Figures: More Of The Same

I think there must be a reason they talk about "summer doldrums" in many industries. It's because nothing much happens.

That must be what we're moving toward with June's sales figures: nothing much is happening.

The Absorption Rate for single family homes went up a bit over May. For June, the AR was 7.3 percent. That's just a bit better than May's 6.8 percent rate and kind of reflects the sleepiness of the market. Must be the hot weather. Or the rain. The Absorption Rate for condos was snoozing as well. It was at 4.5 percent for June, down a little over May's 4.7 percent figure.

Still, an increase of half a point is better than a decrease.

The number of single family homes went down a bit in June over May. In June there were 8,617 single family homes in the Multiple Listing Service versus May's 8,675. The good news is that sales were up a little in June to a total of 632 single family sales for the month. In May there were 590 sales. The number of single family home sales has gone up every month this year -- that's a good sign!

The median price is bouncing up and down this year. In June the median was at $185,000. In May it was $175,000.

With condos, the news is mixed. The number of condo listings for June was 7,293 units in the MLS versus May's 7,469. So, fewer condos on the market -- that's good for condo sellers. But the number of condos sold also went down. Only 327 condos were sold in June versus May's 351. Not much of a difference, but less is less. Historically, condo sales usually lag in the summer.

The median price for condos also went down. In June it was $160,000 but in May it was $175,900.

All in all, I think June was a pretty uneventful month for real estate sales. June often is in this area. By the way, the last time we had a median price for single family homes of about $185,000 was during 2005 -- that's before the "great price run-up". So, if you're a seller it might be wise to keep that in mind when pricing your home -- same for condo sellers.

For more information on real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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How Not To Sell Real Estate

For the past few weeks I've been preparing what I hoped would be an in-depth article about what it takes to get real estate sold in today's marketplace. I've been observing the activities of good real estate agents, interviewing them about their techniques and generally begging top agents to share their secrets of success in a down market.

Son-of-a-gun if the doggone St. Petersburg Times didn't run virtually the same kind of story a few days ago. I've been scooped! Is my phone tapped? Am I being followed? Is somebody at the paper stealing my e-mails?

Since I am the proud owner of a never-say-die attitude about such things, I've reversed the story and can now give you the top ways to NOT sell property.

1. Always Overprice The Property. Nothing spells failure like overpriced real estate. Agents told me this is the number one reason for a house failing to sell today. Several top agents said that even in a slow market like we have today, if you've been up for sale more than 90 days without an offer or even the hint of an offer, your price is too high. The market is talking to you, say the agents. And what it is saying is "we're not interested in your property at the current price". When the market talks, smart sellers listen ... and act accordingly.

2. Don't Invest A Dime In Marketing. Every agent and broker I talked to this summer told me this: A house could be priced perfectly and be the best looking property on the block, but if nobody knows its for sale you'll never sell it. Every property needs advertising, marketing and top salesmanship from its real estate agent. If you're not getting it, change agents.

3. Make Certain Your House Has No Curb Appeal. Several good buyer's agents told me that prospects make a decision about a property within 10 seconds of pulling up in front of the place. Those first few seconds are vital for the seller ... you never get a second chance to make a good first impression. If your property looks shabby, you're doomed. Spruce it up and maybe you've got a chance.

4. Never Do Any Housework. You should always make sure that the inside of your property has that well-lived-in-look when prospective buyers come to call. Make sure dirty clothes are on the bedroom floor, wet towels are tossed over the shower curtain bar, and three days of dirty dishes are stacked up in the kitchen sink. Yeah, that should impress prospects. Oh, if you could get some black mildew stains growing on the ceiling in the master bathroom, that usually does the trick too.

5. Never Negotiate With Buyers. Buyers quite often want some kind of concessions from sellers. Some concessions are large, some are small. The thing is, they are often very important to the buyer. Smart sellers will negotiate in good faith with the buyer and try to resolve things in a win-win manner. Top agents tell me that sellers who dig in and won't negotiate often find themselves without a buyer.

6. Always Charge Extra For Your Fond Memories. This comment came up several times among the agents I talked with, and that surprised me. A seller's old house probably holds a lot of fond memories. Sellers seem to think those memories make the house worth more than it is. The million dollar memories of the seller are not worth a dime to a new buyer. Agents need to tell sellers to treat the sale like a business transaction. That's what it is.

7. Never Offer Financial Help To A Buyer. Top agents tell me that more and more buyers -- especially first time buyers -- often need a little financial help from the seller to close the transaction. This could require the seller to pay a few closing costs, or allow the buyer to use FHA or VA financing in which the seller has to make contributions for the buyer. It could even mean taking back a small mortgage for a short time. Smart sellers are making these kinds of arrangements for buyers.

8. Always Lie About The Condition Of The Property. Buyer's agents stressed to me that buyers today will absolutely never buy a pig in a poke. They are going to have the property professionally inspected. Since buyers are going to find out about the problems anyway, why not repair them before you put the house on the market? If you don't want to make the repairs beforehand (or afterward for that matter), then sell the house "as is" if you can -- but be prepared to adjust the price downward. Remember, to get top dollar you have to be in top condition.

9. Always Lose Sight Of Your Selling Objective. A really big time selling agent who will remain nameless at his/her own request told me that this is becoming a big problem with sellers today. The more I thought about it, the more it seemed like this is a sure-fire way for a seller to lose a deal. I was told that sellers today often lose their way and lose sight of their selling objective. Some sellers have the objective of selling so they can move to a new home, or to a new city. Others have the objective of selling in order to obtain a predetermined return on investment (ROI). The first objective is a legitimate real estate transaction and generally involves the sale of a primary home. These kind of sellers generally stay on-task pretty well. The second is strictly an investment decision and real estate is nothing more than a mechanism to reach a financial goal. Sellers in this kind of situation need to keep their true goals in mind when negotiating with buyers. Otherwise incorrect decisions can be made and the deal can come apart rather quickly.

Well, there you have 'em. Nine things I discovered about how not to sell property. Essentially, I think I knew all of them, but it's nice to know that other agents are experiencing similar things. If you know of some other ways not to sell property, send them along. I'll do a version two of this story.

If you'd like more information about real estate in the Tampa Bay area, visit my website at http://www.thestpeterealestatesite.com/.

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