Sellers, Fix Problems or Risk Buyers Walking

When the market was hot, sellers were in the driver's seat and buyers would put up with a lot. Buyers were almost grateful to have a seller accept their offer and make a deal on a house that they were willing to overlook problems that would crop up with the house or the closing process. Those days, however, are long gone.

Buyers today don't want any surprises, and don't want to assume any uncertainty or risk. Underground oil tank? Get it tested or get it out. Old mineral rights or rights of way on your title? A seller may be correct that they are unlikely to cause any problems, but buyers want them cleaned up. That inground pool that hasn't been used for a few years? Buyers expect sellers to get it operating, so they don't assume the risk of any pool problems. No road maintenance agreement on the private road you share with four neighbors? A buyer may well want to see something formalized before plunking down the cash. No idea about your septic that's been operating fine for 20 years? Get it pumped out and looked at.

Unless they're buying an "as-is" handyman or foreclosure, buyers want a pretty clean bill of health. They aren't necessarily expecting houses to be perfect, or every repair item identified during the inspection be fixed. But there is an expectation for some assurance that there is little risk with big kahuna items like septic systems, oil tanks, central air conditioners and pools that often can't be thoroughly tested or inspected during a standard home inspection.

Title "clouds" (issues) and survey discrepancies can also crop up in the process of a sale. (They're more common than you may think.) A couple of years ago, if there was a discrepancy in a survey that required the seller to negotiate a lot line adjustment or legal accommodation with a neighbor, a buyer would often be patient and willing to wait the couple of months it could take to work it out. Today, buyers are far less patient. Sellers need to have done their own due diligence, to make sure they have marketable title, or risk losing the deal when the buyer's attorney uncovers a title or survey issue.

It's striking how few sellers have adjusted to this change in buyer attitude. I'm sure part of it is that sellers feel they are "giving their house away", and therefore are even less willing to spend money to get it 'market ready.' Hanging some baskets of petunias on the front porch and painting the front door may increase curb appeal and get buyers to walk into a deal, but they'll walk right out if there are problems in big kahuna items. Providing buyers with some assurance that your property is "low risk / no risk" is central to actually closing the sale. 

Comments

[Ghost of housing and land boom]

What happenend to everyone? Must all be hunkering down in their fox holes. After all we are in a depression.

[ar]

Ghost - I think there has been significantly lower traffic since Dave imposed monitoring of comments. People like the instant gratification of seeing their comments appear right away; they visit the site more frequently when they can get that gratification; the more visits, the more comments, and the pattern begets more of the same. It works in reverse: take away the instant gratification and eventually you get fewer comments, which begets fewer visits, which begets fewer comments. But at least, thank god, you don't get folks posting actual recent sales prices that shed some transparency on the market and undermine optimistic assessments that "the worst is behind us" and "I see a definite pick up in interest this week....."

[David Knudsen]

ar, I wouldn't have started moderating on here if 1) the data being posted was accurate, and based on reasonable statistical sizes, rather than just being pulled in snippets that fit the poster's argument, and 2) persons posting that data would identify themselves, with at least an accurate email address, so I could get back to them directly if I had issues with the data they were posting.

I found that the way this data was being posted was also misleading. Pick 5 sales with wide spreads between the asking price and sales price, post them and then make the claim that the bid/ask spread is far wider than the 88% number I posted. Find a 14 day period with particularly low priced sales, then post that the median for the "most recent 14 day period is $102,000" or something --- leading the reader to believe that the median overall, consistently and as a trend has fallen to $102,000 or whatever.

The belief that you and a few others on here have that a masked man who refuses to identify himself (and I'm pretty sure it's a him) is the guardian of truth, while I am somehow the purveyor of falsehood and obfuscation really pisses me off.

Sorry if I don't share your totally bleak view of the world, and see some bright spots and pick ups in activity --- in some parts of the market. (I'm also quite upfront with opinions that other parts of the market are soft, and likely to experience further declines.)

By the way, I think I shed plenty of transparency on the market. I've been posting sales data every single month for EIGHT years, while the market's going up and while it's been going down. The data pull has been incredibly consistent, the same sampling method every single month. When there have been one or two particularly high priced sales that pull the average up, I note that — and often also post the data with those sales excluded, to give a more balanced picture. When the phone wasn't ringing and nobody seemed to be shopping for property, I said that. But the fact is I AM busier now, and buyers seem to be returning to the market. Sorry that doesn't fit neatly into your Armageddon, world is ending scenario.

There are about a half a dozen who comment on here who are very negative market bears. Yes, the market has declined, and I'm upfront about posting that prices overall seem to have dropped about 30% to 35% from their peaks. From watching the comments over the winter, there are some who are chomping at the bit to see a total collapse, with real estate prices declining, say, 75%, with sellers desperate to find buyers who will pay anything for their house, with land prices in the hundreds of dollars per acre (rather than the thousands.) 30 to 35% price declines aren't good enough for you; you want to see sellers flinging themselves out of 10 story windows in the throes of financial suicide.

[rod]

Amen David - from all of us who make a living in Sullivan County. There was no reason why your blog had to be the sole conduit for the crap that was being bandied about (repetitively and non-ceasing). Less posts probably don't translate into less unique visitors/readers per post -

Although the bid to ask ratio that David highlights each month is very misleading, and I know he disagrees with this conclusion - but if a house drops $200k in asking over 2 yrs, then finds a buyer at his asking price (or close to it), that's hardly getting 90% of what the seller wanted. A better method, if it's possible, is 'sales price to original asking price'. Since there is no denying David attempts to paint a fair picture of the market, he should patent a formula that factors in time on the market, original asking price, # of price changes, etc... Any out of work mortage securities engineers have some extra time on their hands and want to come up with something?

It's no secret that David is one of the better real estate professionals up here, so is ar suggesting that he should hide the fact that he stays busier than the market in general. People are buying real estate, and they are buying it from a pretty narrow field of realtors. Over the last 4 years, David has nailed and articulated a forth-coming trend with only the most minimal and vague clues.

Bravo David. And thanks.

[mary ellen]

Much of what was said, especially by the negative 'ambushers' was not true...they would just blurt anything to make your comment sound like Pollyanna wrote it. I do miss the instant responses this blog used to receive, (sometimes it was funny how fast people felt the need to squelch any optimism)but it feels more informative now, as a lot of the pissoffedness has disappeared.

[DN]

I read it much MORE than when it was overrun by those who posted nasty comments. People can certainly have pessimistic opinions without having to resort to personal attacks. (Never understood why they didn't just create their own blog instead of trying to hijack David's.) Thank goodness he moderates this site now.