Oct 09 2007
How to Stop a Declining Market
The number one issue impacting values today in Denver are foreclosures. There are certain subdivisions in the metro area with over 40% of the sales being from bank owned sellers. That is a staggering statistic.
What can we do about it?
As leaders in the real estate industry we must effectively communicate in order to stop the downward spiral. Here are 5 important (easy to do) tips:
- Realtors: make sure you include “bank owned” in your remarks section of the MLS. That will give notice to the appraisal community to pay special attention to the terms of the sale.
- Realtors: if you have a property that needs a lot of work - let the appraisal community know. Say “needs work” or “sold as is”. This info helps to let the appraiser know if a condition adjustment could be warranted.
- Lenders: quit giving away properties. Get an appraisal and see what it is really worth. You are actually lowering market values by selling a property at extreme discounts.
- Appraisers: have the courage to tell the truth. There are appraisers that are telling clients something the client wants to hear, but the house ends up staying on the market for over 6 months because the appraiser didn’t have the courage to tell the truth. Then that property ends up selling for LESS than market value! If a client is in the business for the long term, he/she will appreciate you telling them what it will really sell for.
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Consumers: not all foreclosure sales are bargains. For example, say a property is worth $185,000 if it is fixed up and let’s say it needs $25,000 to fix it up. If the consumer pays $170,000 for the property, that is not a bargain. You just lost $10,000. Make sure you consider the costs to put a property in marketable condition.
The real estate community needs to be bold. We need to help people to understand all the nuances of a declining market. SUPPLY is dictating our market now. The sooner we can balance our supply and demand the sooner we can get back on track to a strong real estate market.