Wednesday, June 3, 2009
I wrote an offer over the weekend on a nice house on the edge of Bahama Village. I point out the location because the location is part of the reason the house has not sold. The house itself is very nice. It has the features many potential second home buyers want: enough bedrooms and baths, new kitchen, off street parking, and charm for days. But the location causes most buyers to not even look or if they do look, to choose another location.
I wrote in my blog about a similar property a few months back. I hosted many "Open Houses" at the height of the buying frenzy at a house on Whitehead Street just off Truman Avenue. It was newly redone by a real craftsman. Everything was great. It had 3 bedrooms, 3 1/2 baths, granite countertops, 3/4" solid maple floors, a new pool, new windows and doors, off street parking, and it was charming. It was priced at $595,000 for an all new custom redo. Literally hundreds of people walked through the house during the months I hosted Open Houses. Most of the lookers were on their way to see the Hemingway House or the Southernmost Point. But some were serious lookers that I turned into clients. But nobody ever considered buying that house because of its location. They said if it were on the "other side of Duval" it would have been a different matter. And that is the same problem with the house mentioned above. It is a great house in what most buyers consider to be the wrong location.
Instead, I want to discuss the seller's potential predicament. The seller's agent told me "My seller does not want to lose any money." I can appreciate that. The seller paid "X" for the house and added improvements that cost real dollars. Now, for whatever reason, the seller wants to sell.
The real estate market is different now than it was a few years ago when the seller was the buyer and buyers were buying almost anything. Even back then buyers were resisting "that" location. I'm referring to the similar house I mentioned above. It is located a block or so from the house owned by this potential seller. Instead of being part of a buying frenzy, today's buyers are part of a bottom feeders frenzy. Buyers are looking for deals. But they want they still want location, value, and charm.
A buyer can sometimes create charm by building new or redoing a place. Sometimes. I've seen too many places with botched redos. Charm does not come cheaply or easily. Many properties are certainly better values today. There have been several short sale and bank foreclosure properties that have sold in Old Town, Casa Marina, and The Meadows areas that were real deals. (I wrote about many of them in my blog.)
We are in uncharted territory right now with all of the short sales and bank foreclosures. Many sellers will sign almost any contract as long as they think they will get off the hook and not be held financially responsible for any of the shortfall on the loan. A lot of the properties that have sold were bank owned and sold at a discount. But the discounted prices have pretty much become the "market".
However, there are still some real world/real market properties offered for sale. If a seller really wants or needs to sell in this market, he or she is going to have to meet the market to sell. Crossing of one's arms and defiantly stating "I don't want to sell at a loss!" won't work. Having one's Realtor make the statement won't change anything.
If a seller who owns one thousand shares of GE stock that he bought in 2007 for $35 per share wanted to sell that same stock today he would sell it for around $13.50 per share. Next week it might be worth more. Maybe less. He could refuse to sell it and hope the price recovers. But if he needed to sell, he would have to accept the loss.
Yet many real world "sellers" refuse to accept the fact that they may have to sell real estate at a loss. Unless a property sells for all cash, it is pretty safe to assume that a buyer would need to finance the purchase. Lenders will not lend if a property will not appraise. It is that simple.
I know my buyer won't be getting the house I mentioned above. Maybe the seller really does not need to sell. But my suggestion to the seller's agent was to get an independent appraisal of the current market value. No rational seller wants to sell at a loss. But every seller ought to know what his or her property is really worth in this current market downturn.
CLICK HERE to search the Key West Association of Realtors mls database. When your search is complete you will be able to see how long each listing has been on the market. If a property has been listed for a really long time, ask yourself "Why?". If you see a property that you like and would like more information or would like to schedule a showing, please call me, Gary Thomas, 305.766.2642. I am a full time Realtor at Preferred Properties Coastal Realty Inc in Key West. Our office is an affiliate of Christie's Great Estates.
The information on this site is for discussion purposes only. Under no circumstances does this information constitute a recommendation to buy or sell securities, assets, real estate, or otherwise. Information has not been verified, is not guaranteed, and is subject to change.
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Gary Thomas in a Nutshell
- Gary Thomas
- Key West, Florida, United States
- I first read about Key West in a magazine called "After Dark" sometime in the mid 1970's. But it wasn't until March 1984 that I made my first visit to the island that would become my home. I had two weeks for a vacation and reserved a room at Colours Guesthouse (now Marrero's Guest House) for one week. I thought that if I didn't like Key West, I could always go back to Miami or Ft. Lauderdale for the rest of my trip. But after a couple of days in Key West, that was no longer a consideration. But when I wanted to extend my stay for the extra week I found there was no room at the inn. The guesthouse owner did find me a room at LaTeDa, the infamous guesthouse/restaurant. That's a story I'll write another day. But those two weeks in Key West gave me the realization that I had found Paradise. Key West has been my home since 1993 and my only regret is that it took me so long to get here. I am a full time Realtor at Preferred Properties CRI. Let me help you find your new home or business in Paradise. Living in Paradise is not a slogan, it's a way of life.