Sellers Still Don’t Get It

By: Diana Olick
CNBC Real Estate Reporter
Date: 14 August 2009
Link: http://www.cnbc.com/id/32420604

The article below is right on target. Milwaukee home owners still have their houses priced higher than the market is willing to pay. While our market was not hit to the same degree as other markets the Milwaukee Real Estate market is still subject to buyers who are not willing to over pay for a property. It seems that most sellers are willing to hold out a long time and suffer through several price reductions before the sale is closed. What these sellers don’t realize is that it often costs them more because they get less as the property sits on the market. Factor in holding costs and it’s often been better to just price the home right from the start.

I realize that we’ve seen some more positive stats in housing over the past month, but what exactly makes home sellers think that we’re all back to business as usual? A new report from Trulia.com today finds that a full one quarter of all properties on the market in August experienced at least one price cut while still on the market. What this tells me is that a huge number of sellers still don’t have a handle on what their homes are really worth. Realtors continue to say that the only way to sell in today’s market is to price aggressively. Unfortunately, many tell me their clients are still not listening.

According to Trulia, “the total value slashed off active listings now totals $27.8 billion.” That’s nearly $28 billion worth of overblown expectations. The report adds, “while home sellers in several cities are beginning to price more aggressively, and forgo the need for price reductions, many continue to ignore market conditions and over-price their homes.”

The cities with the most price reductions include Boston, Milwaukee and Minneapolis, which are of course not usual suspect cities in California and Florida, i.e. the price crash capitals. I have a theory (of course I do). Sellers in the hardest hit states know that desperate times deserve desperate price reductions.

Is it just possible that the sellers in the other states – those that are reluctant to price aggressively – aren’t as naive as they seem? Is it perhaps instead a hidden indicator that prices in these states are about to fall off a cliff, due to the fact that, as we saw in the RealtyTrac data yesterday, foreclosures in non-boom cities are starting to rise. We all know foreclosures bring down prices of neighboring homes. Sellers in these states may not be factoring in the bargain-priced distressed properties with which they are now suddenly competing.