Friday, April 07, 2006

Why Do You Think Your Home Hasn't Sold?

Basically, there are two reasons.
1) Your real estate professional or web listing aren't doing they job.
2) The other reason is that your home is overpriced.

Now, even if you feel that your broker isn't doing a thing for you, if your home is listed for sale on the Sunshine Multiple Listing Service (MLS), 7,203 Realtors in the Naples area will have access to that listing and (believe me) would like to sell it. So, it comes down to this: you want too much for it.

Usually, sellers are upset and feel insulted when they hear that, because most people think that their home is worth a certain amount, usually based on what they see happening in their neighborhoods; buyers, however, usually think it is worth less. To further overuse the word "usual," let me also say that homes "usually" sell for an amount that the "market" determines.

"Market value" is defined as the most probable price a property will bring from a fully informed buyer, willing but not compelled to buy, and the lowest price a fully informed seller will accept if not compelled to sell. Add to that the synergy of supply and demand, and you have something akin to a scene at the Kasbah.

It's like this: Last year, there were a lot of people wanting to buy homes in Naples. Prices started going up as the supply of homes dwindled and buyers agreed to pay more and more. However, a lot of buyers weren't interested in living in Naples. They bought property and promptly put it back on the market at (sometimes much) higher prices, driving prices higher. A lot of sellers saw an opportunity to make some easy money and put their homes up for sale at (sometimes) exorbitant prices. Many of those homes sold, and prices continued that steep upward trend.

Seeing this, many speculators bought new homes at pre-construction prices. As many builders put "anti-flipping" contingencies on these purchases, penalizing re-sale before expiration of a (usual) one-year waiting period, much of this inventory is now coming on the market.

So, we have the following situation: there is more inventory now. Buyers, unsure about the state of the economy and skeptical of what they perceive to be overly inflated asking prices, are hesitant to spend their hard earned (or borrowed) money. So, supply exceeds demand and the fear factor has also set in.
If you are presently trying to sell your home yourself, or "For Sale by Owner," you are at a disadvantage. The dramatic appreciation in selling prices of last year is not going to happen again. There are many homes for sale right now, i.e., more inventory, and supply is exceeding demand. So, you might be asking too much; if you reached your asking price by comparing recent "solds" and looking at the appreciation we had last year, your price probably isn't realistic. Also, by not having your home listed on the MLS, those aforementioned 7,203 Realtors are not working for you; you are competing against those listings that are indeed accessible through the MLS and which also offer to compensate a cooperating broker with a commission. And, if you are trying to sell a vacant lot by yourself, you really are an optimist, aren't you?
This is what is now happening: sellers are reducing asking prices and lowering their sights a little. Buyers are realizing that we still have great interest rates on mortgage loans but that the Fed keeps raising the prime rate. The market is coming back into equilibrium.

Additionally, we have a "sunshine-feel-good factor" here. Naples happens to be a really great place to live and people will continue to want to come here. What would be really nice is if the people who work here could also afford to live here.


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