DEL.ICIO.USBargain-hunting home buyers wearing on sellers
Agents try to keep clients’ requests reasonable
The Atlanta Journal-Constitution
Tuesday, March 24, 2009
Lowball prices for homes are blooming this spring like cherry trees. After listing his Lake Lanier house in November, Pete Withers finally received an offer. But it was so pitifully low — $244,000 less than what he paid — that he didn’t even bother to counteroffer.
“I just said ‘no thanks,’” recalled Withers, a Ford Motor Co. retiree. “I really wasn’t too surprised. People are trying to take advantage of a down market.”
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Ron (left) and Jean Rahman leave an open house in the Vinings Estates subdivision in Mableton.
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Michael Topor (right), an associated broker with Metro Brokers/GMAC Real Estate, talks with Ola Bakare during an open house.
Spring traditionally is the time when home sales reawaken. Buyers plunk down earnest money now so they can move their families during the summer when school is out.
But the 2009 market is in a stupor. Sales and sale prices are well below what they were a year ago, and short sales and foreclosures are more prevalent. Buyers want deep discounts, triggering seller consternation.
“The buyers’ expectations of getting a bargain are leading to numerous unrealistically low offers,” Mike Wright, managing broker at Prudential Georgia Realty Midtown, said. As a result, “we are seeing a lot of sellers fatigue. They have adjusted the price to a level often below what they paid for the property and the buyers are demanding more. Real estate agents now have to act as psychologists, mediators and sometimes marriage counselors.”
Sales are off 17.3 percent and sale prices 20 percent compared to last year, said Dan Forsman, president and CEO of Prudential Georgia Realty.
“This is a unique year,” Forsman said. “The mindset of the buyer is way different. They’re negotiating all the way to closing.”
Agents representing sellers find themselves in the awkward position of making offers that can be insultingly low.
“I can only do so much to educate my buyers. I’ll present the offer they want to write,” Michael Topor of Metro Brokers/GMAC Real Estate, said. “The goal of the lowball is, ‘Hey, are you desperate?’ The sellers will be disappointed, hopefully, not angry.”
Carson Matthews of Keller Williams tracks Buckhead home sales on his blog. It shows 20 sales in February compared to 54 in February 2008, a 63 percent drop. He recommends sellers list their homes 12 percent below last year’s prices, and agree to a 1 percent price cut each month the property sits unsold.
“It’s really hard for sellers to stomach,” he said, but necessary in a clogged market in which the sellers can’t sell, so they can’t buy.
Buyer hardball began two years ago when home sales went into decline. In the summer of 2007, a client of Matthews’ put her home on the market for $525,000 and sold it a year later for $382,500 — a 27 percent reduction. The price had been trimmed five times before the lowball offer was made.
The seller’s son, who doesn’t want the family’s name published, said “we were just grateful to sell it, especially with what’s happening now. You just can’t be emotional about those types of things.”
Foreclosures and short sales, in which the lender agrees to take a loss to avoid an even costlier foreclosure, are weighing on the market. They make up 18 percent to 25 percent of today’s listings compared to roughly 5 percent during healthier times, Forsman said.
A record number of monthly foreclosures sales — 10,138 — are scheduled for April, according to EquityDepot.net, which tracks foreclosures in 13 metro counties. (Many of those sales will be canceled due to agreements and bankruptcy filings.)
Hundreds of Atlanta properties are listed on the Internet as short sale or short sale pending approval, meaning the lender may or may not be aware the property is being marketed as a short sale candidate.
Real estate agents are taking training to learn the months-long process of negotiating short sales with lenders. Former loan officer Shane Lee of Hoschton started a business called ShortSaleBuyers.com, which contracts to buy homes, then negotiates with lenders while employing agents to find buyers.
“We’re looking for the biggest discount we can get,” typically 20 percent to 40 percent off the home’s appraised value, Lee said. His company currently is negotiating to acquire 38 properties, all of them in move-in condition.
Withers, the Lake Lanier homeowner, said his 5-acre home with a dock would have been priced at $1.2 million in 2006, seeing as it’s at the south end of Lanier, closer to Atlanta.
But this spring the price is $895,000. He and his wife plan to move to St. Augustine, Fla., whenever their Georgia home sells.
“I’m not panicking, I’m not in a hurry. I’m not going to sell for a big loss,” Withers said. “If it’s next year, it’s next year.”
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