Real Estate Advice For the House-Rich

The boom in home prices is over. No more bubble.

That much we know, and we’ve talked at length about how it affects those looking to buy. What what about people with expensive homes on the market?

Many homes in places like Palm Beach County are sitting dormant, priced at multiples of $1 million and hanging out like a wallflower at the dance — four months, little traffic and no offers. Getting a lowball offer and a chance to negotiate now sounds desirable.

Yes, it’s a buyer’s market, but sellers don’t know it yet. Think of Wile E. Coyote running off a cliff. Ideas for sellers to grasp: The latest numbers from the National Association of Realtors should concern all homeowners contemplating a sale. Nationally, the number of sales of existing homes fell 7 percent during the second quarter of 2006 compared with a year earlier.

In some populous, high-priced states (like ours), the bottom opened up: the Florida housing market is down 27 percent, as is Arizona. California has seen a 25 percent drop, while Virginia and Nevada have fallen 24 percent.

Interestingly, prices for existing single-family homes were still going up during the second quarter compared with 2005, even in those states where the volume of sales plummeted. For example, the median sale price in greater Orlando rose 17 percent. But don’t count on that lasting.

Alan Weinkrantz, the Texas resident who created a blog to stir up interest in his unsold home, admits his blog was only indirectly responsible for his home’s eventual sale. Patricia Esswein, who writes on housing issues for a national publication, offers some more-practical advice for home sellers.

1. Ride it out. If you don’t have to sell, wait. But if you have to sell, try not to panic. Be patient. The fact that homes stay on the market longer doesn’t mean that they’ll never sell. As of mid 2006, existing single-family homes stayed on the market seven months, compared with four and a half months a year ago.
2. Don’t be cheap. We’re all for For Sale By Owner (FSBO) signs work best when buyers aren’t on strike. You need someone out there beating the bushes for you, and that’s what a good real estate agent does. In times like these, with Florida mortgage costs already pinching people, a 5 percent commission can pay for itself.
3. Price it right. Houses are like bread — the longer they sit around unsold, the moldier they look. For the past year, agents have repeatedly said this of sellers who refuse to live in the present and face reality. They get hung up on what the Smiths’ house down the street sold for last year and think, “I should get that, too.” Well, those days are over.

Ask your agent whether offering buyer incentives would be smart. Such as? Offer to pay all the closing costs. Throw in a year’s worth of condo fees. Some sellers offer new cars to buyers.

Are we headed for the big thump? David Lereah, of the National Association of Realtors, says home prices are headed for a soft landing.

Let’s hope so. But in the Florida real estate market, just like the stock market, matters get carried to extremes. Plus, for every reader of this site who hopes for a soft landing for home prices, there’s another who’s in the market to buy and is rooting for the big thump.