What’s your home worth? Not as much as you think
This article from Florida Realtors, and again stresses the importance of a couple of things; first, the importance of knowing the market, and doing a comparative market analysis. Secondly, and this is a difficult issue for home sellers, is the need to emotionally detach yourself from your home. Your home is worth what it is worth, based on the market and only the market!
FORT LAUDERDALE, Fla. – Sept. 29, 2015 – Some homes are sitting for sale longer in Broward and Palm Beach counties, and real estate agents blame the sellers.
With prices rising, more sellers seem unable to accept what their homes are really worth, agents say.
"There's a serious problem with sellers miscalculating and thinking if there's a shortage of inventory, their property must have gone up 25 or 30 percent," said Douglas Rill, a longtime broker with Century 21 America's Choice in West Palm Beach. "When a property has been on the market for months and months and it doesn't sell, it's usually because of the price."
In Palm Beach County, 26 percent of the homes and condos for sale at the end of August had been on the market for at least six months, up from 23 percent a year earlier, according to the Redfin real estate firm.
In Broward County, roughly a third of the homes and condos listed at the end of August had sat for six months or longer, compared with 27 percent in August 2014, Redfin said.
At the same time, a larger share of sellers are sticking to their initial prices, Redfin data show. Roughly a quarter of the listings in Palm Beach and Broward counties have been reduced in price, down slightly from a year ago.
Rill said he had the $350,000 listing for a two-bedroom condominium with a renovated kitchen and new bathrooms in the Carlyle House condominium in Palm Beach.
He persuaded the seller to drop the asking price four times, most recently to $284,000, to make it closer to what other units in the complex were worth.
With no takers, the listing expired after six months, and the seller switched agents. Rill said the unit is back on the market, this time at $320,000.
Agents say this attitude becomes a problem in a market with a scant supply of homes. Continued low interest rates and improvement in the job market have fueled a buying binge.
Some 1,518 existing single-family homes sold in Palm Beach County in August, 1 percent more than the year before. The median price: $295,000, a 9 percent increase.
In Broward County, 1,529 homes sold – 18 percent more than last year – at a median price of $307,250, up 6 percent.
The robust sales, particularly this spring, have depleted the number of listings.
Palm Beach County had 6,622 single-family homes on the market at the end of August, down 8 percent from a year ago, according to the Realtors Association of the Palm Beaches.
Broward had 6,190 single-family homes on the market at the end of August, down 3 percent from a year ago, according to the Greater Fort Lauderdale Realtors.
Many homes priced at market value and in good condition sell within days or weeks, but buyers won't bite if a home is overpriced, agents say.
Sellers often don't realize that asking too much leads to price reductions that ultimately weaken their negotiating position, in agents' view.
"If you reduce it too many times, or you have a drastic reduction, people think you want to give your home away," said Beverly Rothstein, an agent for Berkshire Hathaway Home Sales in Broward and Palm Beach counties.
Michele Hale, an agent for Trump International Realty in Broward, said she had a waterfront "point" lot listing in Lighthouse Point that the sellers insisted go on the market for $2.2 million, even though Hale recommended $1.9 million.
So Hale did what many agents do: She let the sellers have their way to start, listing it at their preferred price for 30 days.
When the home attracted little interest, the sellers lowered the price to $1.9 million.
"As soon as we reduced it – boom – it sold," Hale said.
Mary Dalu put in a new kitchen and made major improvements to her four-bedroom suburban Lake Worth home, hoping it would command a price tag in the $450,000 range when it came time to sell.
"I probably wanted a little more for it – you always do," Dalu said.
But her agent, Michael Citron, worried the home wouldn't appraise for that much, so he suggested she list it for $429,900 – still higher than other recent sales in the neighborhood.
The home drew three offers in a week, and the strong interest drove the sale price up to $440,000. Dalu even negotiated two critical perks: The seller agreed to go through with the sale even though the home didn't appraise high enough, and the seller allowed Dalu to rent the home for a few weeks after the deal closed to give her more time to move out.
Citron said he doubts Dalu would have received such a strong price or had as much leverage in negotiations had she overpriced the home at the outset.
Sellers in lower price ranges – $200,000 to $400,000, for instance – tend to have more leverage because listings are especially thin, Citron said. But listings are more plentiful, and the pool of buyers smaller, in higher-price categories – meaning sellers have to be more competitive, he said.
"Those buyers don't have to fight tooth and nail to get a property like they used to," Citron said.
Dr. Dana Harman-Obstbaum, a veterinarian, renovated her three-bedroom Parkland home, putting on a new roof and adding new floors and a new kitchen, among other upgrades.
She and her husband, Dr. Mario Obstbaum, also a veterinarian, hoped the work would translate into a sale price of over $800,000, but the lack of a fourth bedroom and comparable sales persuaded them to set the asking price in the mid-$700,000s. It went under contract for full price in a few weeks and is expected to close in October.
"It is your home and you have a certain amount of pride in it, but you have to have reasonable expectations," Harman-Obstbaum said. "You have to detach yourself emotionally."
Still, some sellers remain unconvinced. Showing them comparable listings doesn't always work, said Amanda Wilson, an agent for EWM Realty International in Broward and Palm Beach counties.
"Even if it's factual, there's so much emotion with sellers," Wilson said. "You can give them the truth, but they still think they're the exception."