"Lastly a home IS often times an investment for someone whether or not it is a landlord situation or not. In fact my own personal home still has an appreciation of 90,000 and that is after taking into consideration the current market. I purchased this home 5 years ago. If you can tell me of any investment that would give me that type of return I'd be happy to listen. Many people in the Phoenixville and surrounding areas are seeing these types of returns after 3-5 years of being in a home and this particular area never truly saw its peak.
So there you have it, multiple offers, full price offers and great appreciation even with the downturn."
No offense to you personally, but the news and declining sale prices do not support your opinion. Maybe the Phoenixville area is completely different from the market in New Hampshire and the rest of the country, but this kind of advice really misleads buyers who rely on so called "experts" such as realtors when making one of the biggest decisions of their lives. Here in New Hampshire, we have not seen "these types of returns after 3-5 years" and telling people that should expect to see "these types of returns after 3-5 years" referring to your own alledged return of $90,000 is completely misleading. In my area houses have gone down in value - way down! I know this because I tried to sell and have seen housing prices drop dramatically in my area. Even after investing money into the property, after two years we couldn't even sell for what we paid (not including the money we put into it). The following year we tried again after saving up some money so we could sell it for less then we owed, it still wouldn't sell. We saw others facing similar situations. We got a new realtor this year and she told us that our house probably wouldn't sell unless we listed it for at least $20,000 less then what we owe! - not to mention the money we put into it. Based on the comparables she showed us and similar places in our area that finally did sell, she was right. On the up side, I can now afford houses that I couldn't 3 years ago and have seen prices on the same houses drop by $20k-$30k. Maybe your area is completely different from New England and the rest of the country, but we are not seeing any returns after 3-5 years right now.
My husband and I are in a bad situation now because we followed the same bad advice from our realtor that you are claiming now. Almost 4 years ago our realtor also told us that real estate is a great investment and that we would see a return on our home within 3 years - similar to what you are saying. She was wrong and now we are paying for her bad advice. She told us not to worry about getting an adjustable rate mortgage because we could just refinance before the adjustable rate kicked in after 3 years. We trusted her since we were first time home buyers and she was the "expert." We couldn't refinanace after 3 years because properties in our area went down in value, not up in value as you claim. We did not see any returns that you are promising people and neither did many others who are complaining about their depreciating housing values. Even just looking on these message boards and watching TV you see many people who's homes have gone down in value and now they owe more then their home is worth. People who bought 3-5 years ago are generally not seeing much return on their investment and most are seeing their homes decrease in value. Sure, people who bought many years ago are still seeing a return, but not those who bought 3-5 years ago. Given what has happened recently to the housing market, it seems unwise to advise people that they should expect to see a significant return on their home in 3-5 years right now. No one knows when the market will improve or how long it will take to recover so it seems unlikely that people will see a significant return in only 3-5 years. Maybe a modest return after 5 years if things turn around soon, but I highly doubt we will see the kind of fast climb in the market that we were seeing before the bubble burst within the next 3-5 years that would be necessary to assure people a significant return on their house after only 3-5 yrs right now.
Also, multiple offers and full price offers does not mean that the seller is seeing a return on their investment. I've seen listing prices that are less then what the sellers purchased the property for. Of course some people are seeing great returns... like my in-laws who bought their house 30 yrs ago.
First of all, the last decade in real estate was a complete aberration. It will be a generation before we see that level of bubble mania again. Filling the heads of buyers with notions of riches from future price appreciation is doing your clients a huge disservice. After this corrective period is over, we will be going back to more normal times of overall house price appreciation tracking the rate inflation. It will be more like our the housing market of our parent's generation; they never saw their houses as investments and neither should we.
Second, any real estate investor (and I know a few) who has been around for more than a few years will tell you that investing for price appreciation is a sure-fire way to lose money. Real estate should be treated as an income investment that should only be made if it is cash flow positive.
Third, with regards to Phoenixville, one can find new construction at prices not imagined only a few years ago -- SFRs at $130-$140/sqft.
Lastly, a quick search of the Wyncote area returns several houses that have been sitting on the market since last year and have seen their asking prices reduced 15 to 20 percent. My original point was that the seller's asking price is oftentimes meaningless with regards to the actual value of the house. If the seller is unwilling to realize their home's true worth in this market, then move on to a different property. It's not like there is a lack of supply!
124 EAST WAVERLY ROAD, Wyncote, PA 19095
Type: Single Family
Sq. Ft.: 2,517
Lot Size: 10,800 Sq. Ft.
MLS #: 5363392
Age: 78 years
Entered Date: 06/03/08
Price Reduced: 06/28/08 -- $409,900 to $389,900
Price Increased: 07/01/08 -- $389,900 to $394,900
Price Reduced: 08/18/08 -- $394,900 to $374,500
Price Reduced: 10/30/08 -- $374,500 to $369,500
Price Reduced: 02/04/09 -- $369,500 to $339,900
Price Reduced: 02/13/09 -- $339,900 to $334,900
Price Reduced: 02/20/09 -- $334,900 to $329,900
19.5% reduced from original listing price
347 HEWETT ROAD, Wyncote, PA 19095
School District: CHELTENHAM TOWNSHIP SCHOOL DISTRICT
Type: Single Family
Sq. Ft.: 2,444
Lot Size: 30,044 Sq. Ft.
MLS #: 5406159
Age: 78 years
Entered Date: 08/19/08
Price Reduced: 09/19/08 -- $489,900 to $475,000
Price Reduced: 09/24/08 -- $475,000 to $399,000
18.5% reduced from original listing price
781 ROSLYN AVENUE, Glenside, PA 19038
School District: ABINGTON SCHOOL DISTRICT
Type: Single Family
Sq. Ft.: 1,176
Lot Size: 7,500 Sq. Ft.
MLS #: 5463604
Age: 59 years
Entered Date: 12/23/08
Price Reduced: 03/28/09 -- $310,000 to $298,000
Price Reduced: 03/28/09 -- $298,000 to $265,000
14.5% reduced from original listing price
Just to toss in my two cents, we just went under contract at $183k for a home that was originally listed at $263k. The difference is the local market has declined, stubborn seller who's been in no hurry to sell and its been on the market for two years! Since 2007 the seller has slowly and reluctantly come down in price and just recently came down to $199k in June.
Our original realtor refused to show us the property citing that our ceiling was 180K and it'd be a waste of his time as it'd be impossible to get the property for the price we wanted to pay. Well. we fired him and went through another brokerage. We came in with an offer of $160k with $7,500 towards closing, spent a few days negotiating back and forth and settled on 183K with a 7k seller's concession towards closing & prepaids. My point is it IS possible to talk the Seller down a significat amount but again, it depends on the above variables. Additionally as stated by others, you're taking a greater risk if there are other interested parties involved. In the end you've really just got to ask yourself what that house is worth to you and would you be willing to lose the home if in fact the Seller declines your offer or a bidding war ensues.
Any response from the seller? Without knowing the location, condition, size, length of time on the market, etc. of the home I'd say that the price seems to be a reasonable starting point. Let us know how things go.
The market is not as terrible as you are making it sound...in my area and in many areas surrounding Philadelphia. In fact I am on par with the numbers I had last year and the year before. When you are a full time Realtor who takes the time to listen to your clients wants and needs whether it be a seller or buyer and when you treat all parties with honesty it is not hard to come by future clients. No one is starving at this point unless they are inexperienced and truly do not care about their clients.
If I know there are multiple offers going in on a property or since I know my area SO WELL I realize that the house my clients are interested in will sell quickly it is my obligation to tell them so and my obligation to guide them to make an offer to secure the house for them. That is my job! Just as it is my job to advise a buyer when the home is overpriced. Sometimes the problem is that consumers listen too much to those who have no experience in the day to day Real Estate World and not enough to those of us who actually know what we are talking about.
I would not tell a home inspector how to do his/her job, I would not tell a physician how to do his/her job and I would not tell an attorney how to do his/her job as I have no knowledge in those areas, I wish others would give us the same courtesy. An opinion is one thing, a completely false across the line statement is another.
Jennifer Daywalt, Realtor
It is far better to examine average price per square foot. RadarLogic (http://www.radarlogic.com/) has these statistics for the Philadelphia area (and other metro areas) and they clearly show that price per square foot is in a downtrend. Here is a graphical depiction of the current trend.
Also, Andrew makes the point that Wyncote average sales price has risen, but he has neglected to mention the size of the properties that have sold. You can check this information out yourself instead of relying on sales people who have a vested interest in you paying the highest price possible.
propertyrecords.montcopa.org Search by township and sort by sale date
http://rodviewer.montcopa.org/countyweb/disclaimer.jsp Here's where you can check out the most recent mortgage info, once you find out the parcel id or owners' names on the previous website.
Of course, even knowing this info is no guarantee you'll put in an offer acceptable to sellers, but it can't hurt either.
With that said there are many sellers who obviously still believe their homes are worth more than they truly are at this time. Absolutely no doubt. However to paint a picture of desperate sellers and advising buyers to make ridiculous offers on properties is not responsible. There are homes that are priced correctly and that is when we start to see the multiple offers. The examples you provided are examples to support your view, there are many that support mine and others.
Jennifer Daywalt, Realtor
I'm sorry you are in the situation you are in. First let me say that I never recommended an ARM mortgage to any of my clients. In fact I usually don't recommend any type of mortgage as it is not my specialty however whenever a client mentioned an ARM I did let them know that the rate would go up and they have no idea how much as no one has a crystal ball. I also told them that I felt it was a risk as I did the interest only loans and I made my opinion known to them. I am always looking out for my clients whether they be sellers or buyers and I am always looking for a win win situation for both regardless of whether they are my clients or not. My favorite saying to all of my clients is if I had a crystal ball I would be rich. I cannot and do not claim to predict the future Real Estate Market but only go by the past and the present. I was very specific when speaking to the new homebuyer as we were talking about my particular area and I did mention that many areas have seen a severe decline. We simply have not and in fact many of our areas are increasing as I write this email. However as I am the TOP Realtor here in Phoenixville I know what my clients purchased homes for 3-5 years ago and I know their current market value and many of them, if not all, made excellent choices even with the downturn. Would they have been worth more if the market did not make an ADJUSTMENT? Yes but that doesn't take away that they were and continue to be a good investment for my clients or most that bought in this area. I couldn't possibly make that statement for the rest of the country as I do not know the individual market conditions. What I do know, from agents I know in Florida and Arizona is that although they had a severe decline in home prices they are stablilizing at this time which is very good news for the rest of the country as we all know those two states along with California were hit the worst and when they begin to stabilize the others who are facing declines also should if we rely on past history. Real Estate like any other situation is cyclical. We have the ups and the downs. There are no promises and there is always a risk. I'm sorry that your first Realtor did not come prepared with Comps but I will tell you that I have gone on many listing appointments and no matter what I tell that potential client and no matter how many comps I show them, they sometimes have in their head that their home is worth so much more than anyone else's and unfortunately that mind frame is difficult to change until they realize no one is making an offer. I also did not say that people could see a significant return on their homes in 3-5 years, what I said was that people in my area who bought 3-5 years ago are seeing a significant return right now. And the clients that I represent who are realizing multiple offers are seeing a GOOD return. I speak only from those that I directly deal with and I stated that several times in my response. Not everyone is going to see the same results in different areas of the country but here in this particular area with the exception of a few areas we are still seeing a good Real Estate Market. I hope things go well for you.
Oh EJ....where to begin...
First of all the last decade of the Real Estate market was NOT an aberration but was in fact real. It will not be a generation before we see the "bubble" mania again. Although the market has made a correction, that is true of Real Estate...always cyclical. I don't know whom you ar referring to when you speak of filling buyers with notions of riches. Its so funny to me to see people throw terms around such as "Housing Bubble". It is nothing more then the natural way events come and go. The .coms, just because so many people make millions and others did not does not take away the fact that it was REAL!
Secondly I have to admit that I also know a "FEW" investors...in fact MANY and they are investing. They will not realize the return they have in the past however they will see a return. I have sold many homes including a few this year and those sellers had kept those properties for their retirement or as an investment and they are making their returns. So again to make such a blanketed statement is ludicrious.
There is no doubt that New Construction has taken a hit. Do you believe it is because of the prices...in some cases you would be correct. However much of it has to do with the assessments for taxes which if you know anything about Real Estate you would know that New Construction House Taxes are MUCH higher than a resale due to the period of time that it was assessed. Purchase a resale home at 350,000 and perhaps your taxes are 4,000 a year (an estimate depending on the area), purchase a new construction home at 350,000 your taxes could be in excess of 10,000 a year (again estimated depending on area).
Hmmm I've run out of room.
Jennifer Daywalt, Realtor
If your offer gets accepted then it was a good offer. If not it should be the basis for begining negotiations. With all due respect to other realtors, do not worry about insulting the seller. It is usualy the agent who is insulted not the owner. If they do get insulted and refuse to counter then maybe they do not want to sell badly enough and you can move on to the next property.
Good Luck and if it does'nt work out give us a call.
Fran and Mark Redding
Prudential Fox & Roach, Realtors
1010 Stonyhill Road
It is obvious why you are not a Realtor. Your clients would NEVER secure a home! I would like to see the numbers backing your statements concerning homes not going up in price anytime soon. I can tell you for a FACT that Phoenixville is already going up in pricing and in fact is up 3% and in checking Wyncote as Andrew stated earlier they are up by 3.1%! Of course I'm not sure where my conflict of interest is as I don't represent the seller of the property Newstart is purchasing and I don't represent him/her. I represent both buyers and sellers and if I feel a home is overpriced I will say so to either client. I have had 3 homes I had listed in the past 3 weeks where we received multiple offers after days on the market and all three got their listing price. I find you need to be very careful when giving advice if you are not knowledgable. While there are areas that have definately depreciated this is not true of all areas and making such a blanketed statement can have harmful effects. It would be like me saying that all people who give Real Estate Advice and are not Experienced in Real Estate usually give insignficant advice. While that may be true of some people, it is not true of all.
Lastly a home IS often times an investment for someone whether or not it is a landlord situation or not. In fact my own personal home still has an appreciation of 90,000 and that is after taking into consideration the current market. I purchased this home 5 years ago. If you can tell me of any investment that would give me that type of return I'd be happy to listen. Many people in the Phoenixville and surrounding areas are seeing these types of returns after 3-5 years of being in a home and this particular area never truly saw its peak.
So there you have it, multiple offers, full price offers and great appreciation even with the downturn.
Jennifer Daywalt, Realtor
Re/Max Results Realty
Top Realtor 2004, 2005, 2006, 2007, 2008
610-489-7355 Main Office
Also, a home is shelter -- a place to live and raise your family. It is *NOT* an investment (unless you are a landlord). DO NOT pay up in this market expecting future price appreciation -- you'll be lucky to break even if you sell your house 5 years from now.
Lastly, there is no harm in being patient, if you situation permits. Prices of homes aren't going up anytime soon and the longer you wait the better price you will get. You will also be able to save more for your downpayment.
Just wanted to give a differing view from the Realtors posting here who have an obvious conflict of interest.
Hope this helps. Good luck.
First, I think your user name "newstart" is great and second, I think your question is a good one. In fact, it is hard to know exactly what price to offer. It is hard for a seller to know exactly what price to accept.
So, we wrote a few blog posts on the subject. I included them below. I hope you find them interesting, on subject, and helpful.
If it doesn't matter whether or not you get this particular home then you obviously can do whatever you wish however if you are serious about the house then you need to make a serious offer. Good luck with your search.
Jennifer Daywalt, Realtor
Re/Max Results Realty
610-489-7355 Main Office
Andrew Himes, CRS, ABR, e-PRO
Prudential Fox & Roach Realtors
Both of you know where you stand and only this way you will find out what the bottom line will be.
Keep us updated how it worked out for you.