Kathryn Murray, associate broker Tiffany Realty LLC
130 Rappa Point Road
Warsaw, VA 22572 Cell: 804-450-4442 Fax: 877-295-0940 EMAIL OFFICE
Prices on property
Discussions about real estate inevitably come up in almost any social situation. Many people have strong opinions. I try to voice mine, but other "experts" want to prevail. In my mind this isn't a simple market at all. And the market isn't getting any simpler. There are no generalizations that take in "the market." There are the different segments that get more attention and inventory moves more quickly and there are the segments where that isn't true.
It is hard to be the bearer of bad news. Recently I've been talking to a number of people about potentially listing their land parcels. Well the price they can sell them for is not anywhere near what they purchased them for. These properties were purchased at a time when the people had a plan to build and move here one day. Plans changed and that either isn't an option or just isn't desirable. So how do you tell someone that their property is worth 30 to 40% less than what they paid for it and even at that price it may not sell? Well I know that purchasing land isn't exactly the same as investing in the stock market but there is some real similarity to it. We all wish for things that didn't happen or seemingly can't happen. Don't I wish that when I bought a bunch of Apple stock at 13 and watched it do just about nothing and sold it at 16 that I might have had a bit of patience to watch it climb to 700? Well yes, that might have changed my life a bit. That moment is gone. For these people expecting to sell at the purchase price within the forseeable future is out of the question. Things might change. Perhaps if the Northern Neck ever became a location where people could work from home, especially for the Federal government, well this would become a highly sought after place to live. Currently with the inflow and outflow of people who come and live and move to somewhere else we are somewhat stable. (The high inventory we have would say that somewhat stable looks more like we need quite a few more people down here looking first and buying thereafter.)
Yesterday while out on appointments I noted a house that might be appropriate for one of my clients who has been looking for waterfront for quite some time. I drove in the driveway (no one was there) and walked around the house to see what I could see. I looked it up on my phone to find out the price. Well it seemed a little overpriced, and hmmmm, the Realtor hadn't dropped the price in over 6 months, so I easily dropped the price in my head by another $10,000 to $15,000. Later in the day I looked it up in the county records and found something out that must be very painful for those owners. They bought in early 2008, just prior to our banking meltdown/debacle/tailspin. And they paid $360,000 and the current asking price on the property is $239,000 and it's obvious that there aren't any takers. How would you feel in that situation?
Recently I assisted some buyers in purchasing a property. The price they paid was 62% of what the previous owners paid for their property. Not nice. Must have been a hard decision but these sellers obviously had their reasons. My buyers were very happy with the house, but truly at the price at which they purchased, it wouldn't have appraised much higher. That's just where we are at the moment.
Appraisal value is key at the moment. Most buyers will finance and so most buyers will end up getting an appraisal. If the property can't appraise, well most of the time it is not going to sell. Sometimes there is wiggle room. Sometimes a buyer will bring more cash, but that can't be something a seller relies on unless they are willing and able to sit tight for perhaps a couple of years.
It's not easy delivering bad news and I find I have to be realistic all the time. Sometimes that information I convey isn't pleasant. I wish it weren't so. I wish the market was going up brilliantly....but without good jobs and the current excess inventory the market is moving forward, but not in a major way.