Seller Super Motivation Necessary for a Successful Sale?

I've blogged before about the only houses that are moving are ones where the seller, for one reason or another, is 'super motivated'. At least in the cases of the houses I'm selling, it's holding truer than you might imagine. Now that we're more than halfway through the year, I took a look at the 9 deals I've put together since January (both closed or in the contract process and moving to a closing.) 8 of the 9 deals have had some 'super motivator' on the seller side. I use the term 'super motivator' because it's broader than 'financial distress', which is only one of many possible super motivators.

Of the 9 houses, 8 were on the market for more than one year, and a couple for more than two. All 8 had significantly higher initial asking prices and had moved brokers at least once. Only 2 of the 9 would fit into a traditional "financial distress" category, both short sales with investors taking a loss.

The others all had super motivator factors that weren't financial, per se. Two houses were owned (and no longer used) by ill or elderly parents, and their maintenance and sale were being handled by their adult children. Two were second homes owned by people who had moved out of the New York area and had grown tired of hassling with them from a distance. Two were owned by sellers with changed family circumstances that necessitated the sale of their Sullivan County property. Only one of the nine was a transaction without what I would consider a super motivating factor on the seller side.

The common thread among the sellers that aren't motivated by financial distress is that they're just tired of hassling with the house. It's far more appealing to them to get rid of the house headache than hold out for another $25,000 or $50,000. They just don't want to go through another winter, particularly if there's no certainty that next spring they'll get a higher price.

When I look through the closed sales roster, as well as the list of houses in contract in the Sullivan MLS, it seems like the majority of properties that are closed or moving to a close involve some super-motivator on a seller side, whether it's purely financial or something else. They're motivated to make the deal even if, in some cases, they have to throw in the towel and take a loss.

The issue over the next few months is that the market has been clearing this inventory of "super motivated" houses. There are fewer and fewer on the market. Among newer listings, unless there is urgent financial distress, it takes time for sellers to get motivation. Even with estate sales, the initial objective is to get as money for the house as possible, and it can take months for the heirs to shift the objective to getting the house sold and the estate closed out.

These super-motivated sales are setting the price bar among buyers. If they see that there were 3 farmhouses similar to what they're looking for that sold between $240,000 and $260,000 in the past couple of months, they're not going to pay $300,000.

In looking at those 9 sales, and seeing that 8 had at least one "super motivating" factor, I'm beginning to question even showing houses without a super motivator. It's feels like wheel spinning. I get at least a dozen calls and emails every week from listing agents promoting a particular listing. Most of the agents talk about the beautiful this or lovely that and how I really need to come and take a look. But the only phrases that get me particularly mnotivated are "They're ready to sell", "The kids are ready to push the parents to take a deal," or "They've got to move the house before the fall." To make my short list, and get me all hot and bothered about a property, I need to hear some indication that there's a super-motivator in play.

The phrases that will drop a house to the bottom of my enthusiasm list faster than a leaden matzah ball? "Look, the seller doesn't have to sell" or "He's somewhat negotiable but he isn't going to give the house away."

Comments

[...trixie]

David,
Wait until this winter bubbelah.

Prices will drop faster than a "leaden matzah ball."

...Trixie

[ar]

So if you're a buyer, you'd better be beyond certain that nothing, absolutely, positively nothing, can cause you to want or need to sell anytime in the foreseeable future, because Sullivan County is now officially the Hotel California: You can check out any time you like, but you can never leave. At least not without taking a whipping on the price. Sure, it's always been true that houses are not liquid. But when Dave says he may not even show a house without evidence that the seller is "super-motivated" -- a euphemism for desperate -- you know you're going to be holding that sucker for a long, long time. Sort of raises the stakes on the buy side.

[David Knudsen]

trixie, I agree. I think this winter is going to be VERY interesting. Not so much from the standpoint of actual closed sales prices, but on the asking price front. I've been struck this summer by how many houses have come on the market (or back on the market from last year) with asking prices that are more in line with the 2008 market than today. With no action at their current asking price, the big question is how many of these sellers will drop their prices to levels that appeal to today's more cautious, discretionary buyers.

ar, buyer interest in only 'great deal' properties isn't unique to Sullivan County. It's a common phenomenon across the country, and reflective of the first phases of a market recovery. Buyers are willing to buy again, but only if they perceive it as a great deal. That's one of the defining characteristics of a buyer's market — make me a deal I can't refuse. I don't know how long it will take to move back to a more balanced market, but for now, it is what it is.

[andrewr. hoffman]

It's going to be a long wait.

[Rod]

Fortunes are made in times like this.

[David Knudsen]

Want to clarify one thing. Being a super motivated seller with an aggressive price guarantee a sale. It just gives a seller a place at the table and the ante for the first round.