Market Update from New York City
July 24th, 2006
I want to first apologize that I have not updated you sooner however, we have been attending a week long real estate conference in New York City. Despite the great information and networking opportunities we were challenged with difficult sell phone and internet reception.
It is always great to step back and look at your area from different perspectives and getting outside our area has proven invaluable as we have had the opportunity to network and study with realtors from all over the United States. We have specifically explored everything from emerging markets to direct mail campaigns. The networks we have developed have proven invaluable as our goal was not only to look for new approaches in addressing our changing market but to develop relationships with realtors in areas where people are moving from their areas to ours.
With regard to the changes in the market, the slow down is not limited to our area. From New York to Miami to Kansas City and beyond, this is a national epidemic however; there are opportunities that do exist. For those of you looking to invest, there are opportunities that abound locally, nationally and internationally.
However, the surprise, which was really not a surprise, was the continued emphasis on “Being aggressive in your pricing,” which was the theme that resonated throughout the duration of the conference. What we thought we were experiencing on a local basis turned out to be the challenge that most of us faced on a national basis due to the rapid rise in property prices.
There was a realtor who posed a question to one of the seminar speakers who said, “There are no buyers in the market.” The speaker, who was a realtor from Ft. Myers, Florida said, “You are buying into that media position, of course there are.” The other agent responded with, “The reason buyers are not in the market is due to high insurance and tax rates as well as increasing interest rates, I have a house priced at $400,000 and it has not even had one showing.” The speaker said, “If you priced the house at $250,000 do you think it would sell?” The other agent responded, “It would sell in a minute.” He said, “I thought you said there were no buyers in the market!” This is the same position we have been taking with our customers all along - price your house aggressively. What I think has come as a surprise to all of us, is the buyer’s posture or patience in waiting for prices to significantly drop and it is our personal opinion that prices will continue to adjust to those of a year and a half to two years ago. For many sellers a home holds a great deal of meaning and memories. However, a buyer looks at it completely differently. A home is like a stock, it has no value until someone is willing to buy it. As we have stated in the past, fair market value is not what a home is appraised for, fair market value is what someone is willing to pay.
Although giving the house away is not what any one of us is suggesting that you do, it is now very apparent that with the inventory that is on the market and all of the choices that the buyer now has, if you are not getting calls on your property, the price needs to come down even further. Another key point that was addressed (and one that we have been discussing with many of you) is not to “chase the market down.”
By chasing the market down, you ultimately will sell your home or property for less. By aggressively positioning yourself below the market, you create separation and your property stands out. We have all enjoyed the high returns of the market the past few years however, now we all need to be objective and look at it from more of our buyer’s point of view when we establish a sale price. The potential buyer is going to pay much more for the house than you did as well as face increased property taxes, insurance and interest rates (if they are financing). Do the math, and if the potential numbers you come up with make you gasp, it will be hard for an intelligent buyer to make a purchase that you would feel uneasy about making yourself.
International contacts, websites, blogging, pod casting, consistent print and creative media advertising were all discussed as the future platforms for marketing. This was particularly gratifying for us as for the exception of pod casting (which is still in its very early stages) we have already been incorporating all of these formats in our marketing strategies to get your property the greatest possible exposure.
During this seminar we have added to our list of relationships with realtors who have investor groups, specifically looking to invest in Florida on a long term basis as well as other realtors, primarily from the north and northeast whom are seeing their customers move to Florida.
We have been very blessed with a diverse client base and for each of you whether you are a buyer, seller or investor although we will continue to stay at the forefront of industry trends in presenting you with solutions to your needs. By expanding our networking base we have greatly enhanced our efforts to present you with the opportunities you are looking for.
If there is one final piece of information I could give you from this seminar that was echoed from California to Florida it would be, “With the changing market, comes great opportunity. As an investor there are niche markets that have not reached their potential while there are others that present opportunities as investors maybe over-leveraged. You know as a buyer you are in a great position and as a seller, now is the time to price your property aggressively; sell it and free yourself up to pursue your next real estate opportunity.”