A well written perspective on why we haven't hit bottom yet.
I have been accused of setting up a permanent residence in Camp Doom and Gloom. But if that's where professional responsibility and my moral compass says I should pitch my tent, then there I will stay. Any real estate brokerage today must confront the contradictory messages of "it's a tough market for sellers" and "it's a great market for buyers". This psychotic moment in marketing sits smack dab in the middle of my recent posts: Big Girl Panties and Supply and Demand.
The real estate business model rests on the viability of the listings we take and sell. Listings are the engine of the machine that we are all inexticably embedded into. But in order to sell those listings, we have to translate market data (yep, Mr. Seller that is a 25 % loss in value in the past 5 years) into acceptance for those sellers who can, in fact, sell.
The "positive" sales news from the Spring was psychologically and financially damaging for many sellers. Sellers heard an unceasing stream of marketing messages about skyrocketing sales, which created unrealistic expectations.
I believe that real estate agents have a professional and moral responsibility to tell the truth to the listing clients. The fact is that nationally, today's inventory and market times are double that of a stable market (forget hot, just stable), while the value in homes continues to shrink. Those 3.98 million houses on the market? They're just the beginning of the problem. The market is clogged and about to get worse, much worse.
The news from the Mortgage Bankers Association yesterday was chilling. 7 million homeowners are in foreclosure or in default on at least one payment. Only 4% of those late by 90 days or more will emerge from default still owning their home.
You have to live the life of a listing agent to hear the change in the new calls: "Oh, we don't need to sell...we might just test the market because we want to downsize and travel a bit more". BS, I want to say, your oldest is in middle school....you want to downsize now? You, Mr. and Mrs. Delusional Seller, sense that the bubble will burst, but you don't want to face it yet, so go ahead and hire that lisitng agent who tells you what you want to hear, whether it's based in reality or not.
So what does someone trying to be a morally responsible, professionally ethical, and realistic business-oriented agent say now?
Sellers, if they want to sell, must immediately and fervently come to grips with reality. The home must be compellingly priced, it must be in the best possible condition, it must show well -- staging is now a "must do" -- and it must be aggressively marketed by a broker who can and will use every tool in the arsenal.
So on some days, I will emerge from Camp Doom and Gloom, issue my pronouncements, and then creep back into my tent. On other days, I'll sneak away from the compound, gather up my happy, positive and even gleeful buyers and we'll go steal some houses.
This post was written by Leslie Ebersole of Baird & Warner Real Estate.
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