Sticky Seller Ignores Bird In Hand – “He bought new in spring 2009. He is very frustrated that he can’t get a sale, but does not think that the problem is price! He thinks he just hasn’t found the right buyer yet.”

“Colleague at work bought a new 2BR 1200 sq ft townhouse in North Delta (Van suburb) for $330K. Now has 2 kids under 3 and has decided said townhouse is too small for his growing family; they want to rent for a couple of years and then “vultch” a house after prices have come off current peaks. Back in March this year he listed his place at $399K. On the market for a couple of months, only one serious offer, I believe $379K or so, they turned down that “insulting lowball offer”. Pulled the listing to try again later in the year.

Re-listed after Labour Day — this time at $409K. I know, why do they list (doesn’t sell), pull, then re-list later at a higher price?! Well, here is his and his realtor’s reasoning: felt in part that the place didn’t sell/attract offers last time for what it was “worth” because they had low-balled on price and therefore were attracting the “wrong perspective buyer” and were cheating themselves out of a deal at what the place was really “worth”. This is how these people think! And my colleague has a math and accouting background, totally understands numbers……

The townhouse is still on the market today — price drops to $405K, $399K, and currently $389K have not attracted any offers. Some young-ish couples have I gather expressed an interest in the high $370s (the price they poo-poo’d in March!), but in all cases (3-4 times I think), the parents of those folks, who are apparently ponying up the downpayment money, have said they think the price is too high for the location — specifically, within a block or so of a major arterial highway (which one might think would be a selling point given the traffic in the Van area – my colleague’s place does not actually hear traffic apparently).

There are so many units listed, buyers do really have a lot more time and options to shop around. I did try to talk to my colleague (he asked for my view as he knows I follow the RE market, even though I am a renter!) about getting ahead of the price reduction curve, to avoid chasing the price down, languishing on the market and STILL not getting a deal…. when it didn’t get any sniffs back at $409K, I said, given what he had told me about last March’s experience — drop the price to $379K, you want to sell, something “drastic” like that could precipitate an offer, multiple offers maybe and perhaps a price in the low $380s? He does have significant equity in the place about a third, depending on what the place actually is “worth”, so he is not at risk of being underwater….needless to say, he did the slow water torture price changes instead…..

I think he will be lucky to sell in the $360s…. and if this goes on until the spring, which it looks like it will if he is still listed, he will be looking at something in the $350s or even lower….which with breaking the term on his mortgage and paying the commission and transactions costs will leave him at net proceeds likely below what he got in at…he bought new in spring 2009…he is very frustrated that he can’t get a sale, but does not think that the problem is price! He thinks he just hasn’t found the right buyer yet…..”

renters rule at greaterfool.ca 2 Dec 2012 8:36pm

39 responses to “Sticky Seller Ignores Bird In Hand – “He bought new in spring 2009. He is very frustrated that he can’t get a sale, but does not think that the problem is price! He thinks he just hasn’t found the right buyer yet.”

  1. Divide by zero error

  2. There were several humorous alliterative allusions to this thread’s topic that would tie in nicely with the accopanying Xinhua piece… but this morning, unusually for ‘Nem’, discretion triumphed over base impulse.

    DearReaders… your TuesdayZen.

    “It was also agreed at the meeting to cut spending and the number of escorts for leaders on official domestic and overseas visits.”

    [Xinhua] – Chinese leaders vow to fight bureaucracy!

    …”BEIJING, Dec. 4 (Xinhua) — China’s senior leaders have pledged to reduce ostentation and bureaucratic visits, meetings and talks, in order to remain close with the public… According to a statement issued after the meeting, all members of the Political Bureau of the CPC Central Committee were urged to understand the real situation facing society through in-depth inspections at grassroots. This should be done especially in places where social problems are more acute.”

    http://tinyurl.com/a9wzqff

    [NoteToEd: One of these days, someone at Xinhua is going to buy a thesaurus or handbook of colloquial idiom and spoil our fun. Until then, we’d better make the most of it. OldSlogan: “We must go deep down! We must immerse ourselves in the reality!”… NewSlogan: “We must ban worthless NewsReporting and StrictlyRegulate the provision of Escorts!” Oh, how I long for the days when every new slogan would be accompanied by RevolutionaryPosterArt… Alas.]

    • Speaking of RevolutionaryPosterArt….

      “Contestants compete during the finals of China-USA Super Model Contest (China Area) in Beijing, capital of China, Dec. 2, 2012. (Xinhua/Gong Bing)”

      http://tinyurl.com/avv67fp

    • no wanton noodle today?

      • Nope. … and, “Curses! Foiled again!”…

        [Bloomberg] – Bad Sex in Fiction Award Won by Huston Novel ‘Infrared’

        …”Nancy Huston won the Bad Sex in Fiction Award, the U.K.’s “most dreaded literary prize,” for a steamy description of a threesome between a photographer, her camera and her lover.

        The passage, from Huston’s novel “Infrared,” tonight defeated torrid scenes by writers including 2004’s winner Tom Wolfe and Paul Mason, the economics editor of BBC TV’s current affairs show, Newsnight.

        Canadian-born Huston is only the third woman to win the award in its 20-year history. She chooses to write in French, a language she learned as a schoolgirl, and then translates her own work into English. She currently lives in Paris where she has won the Prix Femina, and where Roland Barthes supervised her masters thesis on swearwords.”…

        [NoteToEd: Never mind then. There’s always next year.]

      • I nearly forgot the RunnerUp!…

        …”In “Rare Earth,” a tale of corruption in contemporary China, Mason couldn’t resist drawing on his day job. A tantric tryst climaxes with a man panting about cartels and global markets. “‘The price is inflated because production has been capped!’” he cries out.”…

  3. “He is very frustrated that he can’t get a sale, but does not think that the problem is price! He thinks he just hasn’t found the right buyer yet.”

    Buyers are isomorphic, up to the price that they are willing to pay.

  4. Many times the very first offer you get immediately after a place is listed is the best one. Sometimes it is the only one. Not only should this fellow be frustrated, he should be kicking himself…that is, if his wife (who can’t live without that “dream” home) hasn’t already.

    IMHO, there is NO (as in zero, ziltch, nada…etc) chance in Hades the buyer @ $379k returns. Since the spring, the market has completely seized up making it next to impossible to move (at any price) what is likely another run of mill, cookie cutter unit in a not so desirable neighborhood (that likely needs “some work” now). Maybe a used minivan and a new(ish) 3D flat screen will do the trick? Just sayin’…

    Like deer frozen by headlights, these folks will probably wind up doing nothing but remain in denial as prices ultimately slide down to (and ultimately fall below) their so called breakeven point.

    In the meantime, I suggest these people cancel their subscription to HGTV, forget all about that 100 sq ft island with granite counters and built in wine frig, the “hers and hers” side by side walk in closets, the tricked out man cave and the “must have” personalized kids bedrooms designed by Pottery Barn. Instead, why not make a quick trip to IKEA to buy a bunk bed to solve your so called lack of space issues, then hop over to the Apple store to grab a couple of iPad Minis for the kids (to keep them happy and quiet) and finally take a quick run down to the auto mall to sign a new lease on a BMW X5 for the wifey (to help her deal with the shame of having to shack up in that little apartment for the next 10-15 years). Maybe, yes maybe after this has all been said and done, you might even have some money left over to put aside for retirement.

    There, done, problem fixed.

    • Naked Official is having a conniption

      Disloyal cadre!

      Your BMW x5 barb only thinly veils your contempt for the great Teutonic hordes!

      Disharmonious splittist!

      We will raise your rent and cancel your welfare for such cheek!

  5. Sellers are only ‘sticky’ when prices are also ‘sticky’.
    When it becomes clear that prices have (i) dropped substantially (not yet clear from any headlines, right?) and (ii) are likely to weaken further (inventory; sentiment), we’d expect many sellers to loosen up considerably.
    In other words, RE prices are only sticky for some sections of the cycle.

    • Real Estate Tsunami

      Agreed.
      Also, once the offshore investors (who culturally are more patient),
      realize that this time it is different, they may head for the exit en masse.
      As we mentioned before, this coming spring will be very, very interesting.

      • Naked Official #9000

        Loyal cadre, do not get the hopes up of the plebs in this treaty port – the great Teutonic people do not move all at once into or out of an asset class, this is more disharmony! It will be added to your file!

        http://www.chinasmack.com/2012/pictures/chinese-crowds-scramble-for-free-potted-plants-in-guangdong.html

      • If activity in Richmond is any indicator (ie. price drops of 30%+ in last year alone), many have already run out of patience and have headed for the exits. It goes without saying that the MSM has yet to utter a single peep about this. Perhaps this explains why many sellers still have their places offered at 2010/2011 prices (as the stealth housing crash continues to gather steam). I doubt this situation will be any better come next spring. If anything, another dump truck full of product will get listed (or relisted) putting further downward pressure on prices. I am somewhat curious to see how the talking heads spin this story (ie. sales volumes are UP! buy, buy, buy…!) and what measures (or simply rumors of possible new stimulative measures) will be taken to give this turd of a market one last kick in the pants.

  6. This would be the best thing happened to the sellers. You know, if they had sold and upsized, they would proceed to lose even more money from their bigger home.

  7. ..and this same orchestration of events will happen again and again and again as sellers chase the market down. Sellers always seeking to maximize profit by pricing at the top end, missing that the top keeps dropping and buyers knowing this aim for the bottom of the market or to wait.

    CanAmerican

  8. Yeah blame the buyers for your trouble….geez…

    Actually, maybe he should just list it at $100K and do an open auction like what Garth said on his blog today about a house auction in Saskatoon.

    1200 sq ft for a family of 4 is not that horrible actually.

  9. Actually watching HGTV, especially house hunters, would inject a dose of realism into these type of sellers….seeing what $350K to $400K can actually buy in other parts of the world, with nicer weather too.

  10. There was finally an article in the globe and mail today about how west side prices have dropped 8% in a year. Coming soon to a neighborhood near you.

    • And then there is this little nugget from that same article, Brian…..

      “Home sellers appear more inclined to remove their properties from the market today rather than lower prices to sell their properties. On the other hand, buyers appear to be expecting prices to moderate,” board president Eugene Klein said in a statement.”

      Does that not tell us that vendors is very doubtful of price reductions? Despite all the words of worry to the contrary and all the evidence pointing down in the future, sellers would still prefer to wait and try again later.

      Unfortunately for them, buyers would also prefer to wait.

      Of course almost nobody understands that the same forces that mysteriously drove prices up with no effort on the part of any owner will be the same forces that drive prices right back down again.

      You don’t need to do anything at all to lose value in your home….. Exactly the way you did not need to do anything to gain price appreciation in your home in the first place. This seems to be utterly baffling to most people.

      Thin selling by anxious sellers over the winter can do considerable damage. Add to that restrictive credit and the “Boomer Trigger” that our friend over at Whispers often discusses and we have the makings of very soft spring prices.

      But don’t bother telling anyone.

      They would not listen when we warned prices were topping out and the end was near either. They surely will not listen now as equity whithers and real decisions on pricing are made by others who end up dictating the new price regime.

      • The article focuses on the wrong thing. As we know there are two sides to a market, a buyer and a seller. That some sellers would rather hold off is only half the story and the flip of that they aren’t getting the offers that they want. So pretty straight up. The key though isn’t those who decide to wait it out. It’s those who decide to sell and actually price at market. Job moves, divorce, deaths, court ordered sales, and long term owner with tons of equity to harvest. All these situations speak to situations where a seller will move and set the lower price at margin to make it happen. Funny how the MSM articles tend to miss all that and focus on those not actually impacting the market, because they pull out of it.

        CanAmerican.

      • Yes, excellent point, CanAmerican. Why indeed do these articles focus on the people who are not participating in the market? They sure don’t move prices by watching and waiting. So lets all talk about the people who don’t buy or sell shares of Facebook, Google and Microsoft while we are at it.

        I bet their opinion really counts a lot too!!!

    • Real Estate Tsunami

      To quote Herr Professor Einstein:
      “Once a snowball on a downslope has overcome the initial forces of inertia, it will not stop until it crashes”, or something like that.

  11. Real Estate Tsunami

    Remember when the German speculators were flying in a helicopter over White Rock and picking the houses from the air?
    November reports show a 18% y.o.y drop in prices in White Rock.

    • Yep. Eat your heart out, Baghdad. Tough luck, Beirut. TooBadSoSad, Mogadishu.

      TeeHee!

    • Haha. Liking the comment section so far.

      I’m not so cynical that I can’t see Greater Vancouver’s charms. But I’m not sure they factored in 14-hour rush hours, a dearth of nightlife, unending walls of rain and gloom nine months a year, overpriced *everything,* a demented economy based on buying and selling increasingly unaffordable homes to one another, and crushing personal debt. Sure, we’re not in the middle of a war zone and we’re not the epicenter of a plague, but neither are gobs of other wonderful cities around the world.

    • read as: Vancouver wage compensation in the bottom 5 globally. Mercer’s ranking mechanism has little relevance for people not receiving executive expat packages from a fortune 500 co.

    • Real Estate Tsunami

      My home town Vienna is FUUURST.
      Eat my dust losers.

  12. Meanwhile, We are just trying to figure out how to arm the other 11 with crippling debt.

  13. I Love livin’ in the city

    • Maybe I will go with an alternate tune, Bob.

      It is an old one for sure. A big hit from the long lost past. Stevie Wonder’s “Living For The City” of course…..The thing is; what is new is also old.

      Watch the video. It is an historical piece. Clips go fast. You really had to be there to believe it. Gas rationing, riots, domestic terrorism, racial hatred, political corruption off the charts, intrigue and rapidly declining living standards for all.

      Has anything really changed between now and 40 years ago? Times were tough then too. Different for sure but much more dangerous. We are so apathetic these days.

      Everyone forgets.

      They are so obsessed with our money issues of today that yesterdays wicked politics seems like small potatoes. You can trust me on this though…there were some very trying times back then too. We need to keep perspective on our own worries.

      Stevie Wonder: Living for the City

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