Sales Shockers

Last Friday, a 2,300 sq. ft., 2 bedroom log log home on 94 acres in Fallsburg township closed at $400,000! The property had originally been listed in 2007 at $999,000. It was relisted in May of this year at $769,000 with a mid summer price reduction to $699,000. In late October, the owner said "sell". The price was reduced to $499,000, which resulted in an immediate deal. The cash sale closed 7 days later. (No, this wasn't my deal.)

This sale probably takes the prize as a sales shocker, but there have been quite a few others this year. I've been involved in a number of them — two homes, one at the Chapin Estate (non-lakefront) and one up at Lew Beach selling in the mid $400's, and a lakefront home on 5 acres on Edgewood Lake in the Beaverkill Valley in the mid $300's. All were on the market for more than two years with original asking prices more than double where they finally sold. All 3 had various drawbacks that tempered their appeal at a higher price, but once they reached a certain price the buyers looked through the negatives to see a great deal.

And there have been other super deals sprinkled throughout the county, but they aren't common. They generally all involve the combination of factors I've written about before that result in a "super motivated" seller — a long time on market, some factor like illness or financial hardship that motivates a quick sale, and — this is important — the ability to actually sell at a super bargain price. On the buyer side, they typically are 'seasoned' with a good feel for value and trade offs. So when that super deal tipping point is reached on a house, they're primed to move on it.

The complication with the handful of 'super deal' sales is that they set a bar. Does that $400,000 sale now set the price expectation for a log home on large acreage? Of is it reasonable for a log home on large acreage to sell for $450K or $500K if there aren't 'sell now' distress factors involved? When the last 2 lakefront sales on 5+ acres were $363K and $430K, is another seller reasonable to have a price expectation of $450,000 or $500,000 for a similar house, when there isn't anything else similar currently on the market for less? Are sales similar in situations when a buyer expects to do full due diligence and is using mortgage financing versus one where the buyer is paying cash, waiving full due diligence and closing in a couple of weeks?

These are the kinds of things that make pricing very challenging right now, particularly in the mid to upper range where sales are thin, and the vast majority fall into the "super motivated" category. In the lower, affordable to mid range, there are "super motivated" and foreclosure sales, but there have also been a number of non-distress sales that offer some balance.

Comments

[Dr. J]

I offered 300k on that log home on 94 acres when it was priced at 699k.
The owner dropped the price to 499k after my offer a few weeks ago. Someone must have come along and thought 400k was a steal. The taxes are 9k.

This shows that persistent low ball offers work!!
Anything that deals with large acreage is hard to sell to begin with. Low ball and you may be surprised.

For me, the above listing was not worth more than 325k. There is still some silly money out there even during these times. The future looks great for buyers!

Dr J

[Rod]

Further complicating pricing is the fact that rumors have it that gas companies are paying $5k per acre- meaning why, in the eyes of the gas-is-coming-and-the-end-is-near crowd, don't the gas companies buy these great deals on large acreage.

Does anyone know why gas companies don't buy up some of the large acreage for sale, instead of leasing it and then paying a royalty on top of it?

[Dr. J]

Gas companies NEVER buy the land they rape.
The only reason for this is Liability.
A Leasee is never liable for the land they lease. The Landlord is always liable.

You will see land owners suing land owners all over the place soon.
It is common practice in other states (TX, VA, PA).
Meanwhile, the gas company sucks the land dry and is liable for NOTHING.
Read your lease.....you cannot hold them accountable for anything and you waive your rights to sue them for any damages.

Dr J

[JJ]

Dave what were the particular negatives on the log home?

[kelly]

Rod,
Gas companies never buy large acreage - they lease.

Read their leases which are recorded just like deeds, mortgages, etc.

For the most part, they do not want to be liable...and who can blame them?

I see a CF house is being put back onto the market in Highland after being sold to the seller for only a year.

Time for a change?

Wait until this winter Rod.

We are a discretionary market up here {read: second home}...usually the last niche to improve and the first segment to decline in the NY metro area.

And as Dave states the extention of the tax credit doesn't really help.

It doesn't apply to second homes and if you don't have a primary home - or are buying up - to a primary home in say - Middletown, Massapequa or Mahwah - you can more of an incentive to buy in the suburbs -and hold off a purchase in areas to far to commute to the city.

Kelly Krantz

[Cynthia]

Goodness, we're talking about 400k!! That is alot of money to throw around in the mountains.
Maybe it was a nice log cabin and maybe it had large acreage but 400k? That is alot.