Mud Slides

Power Struggle

Word from one street suggests that an age old power struggle is beginning to take shape between buyers and sellers. Buyers in the know, are aware that the Vancouver real estate market is about to enter the final act of morphing into a buyers market. Street discussion says that the first new market adventurers are arriving at negotiation tables with lower than asking price offers.

The Sellers on the other hand, who, now late to the game – as evidenced by the tremendous number of listings coming to market, are much like a rock in the road, refusing to understand that the Vancouver real estate market is beginning it’s slide downhill.

Classic

Mud Slide Rock – Photo Credit: Damian Dovarganes/Associated Press

This battle always happens when the market changes. It usually means double trouble.

First, the sellers, have for many months heard and have been supported in their belief that they would get either asking or above asking offers.

Second, in this period of flux current data used to establish the price of a new listing does not yet reflect sufficient sales with prices below ask to become a trend. Data change is historical and follows the market mood of people so that by the time it is recorded it is often too late. It takes a front page newspaper notation to make this part of the human nature/data equation complete more quickly.

The beginnings are a classic moment of struggle to reach consensus between Realtor® and Seller to establish a market price that will work. Without rock hard data, few sellers will admit, that based on an opinions dug from Realtor® trenches, they may have already surrendered to the last great real estate price surge.

The Oz Opinion

Ozzie Jurock points out you don’t have to look far to find that lower prices are rolling in.

1. The overall average price (condos, houses, townhouses) is down from March’s $693,500 to April’s $674,410 or lower by 3%.
2. The average used home price is down from $999,500 to $986,900 – lower by 2%.
3. The average used condo price is down from $427,500 to $417,800 – lower by 2.5%
4. Active used condo listings (all listings still for sale from as far back as February and including April) are up for the first time in over a year – and up substantially – by +38% (from 4,435 to 6144) and used condo NEW listings (listed in April only) are up by a whopping 91%! (1,557 to 2995!). Used home NEW listings are also way up by 68% (from 1,816 to 3,011).
5. Overall – all property – active listings are now also up by 18% – a sharp turnaround and a far cry from the huge decreases reported in the last few months. For the last 9 months we have been showing that lower listing inventories and large increases in volume had an effect on prices – as in higher. And rise they did. NOW, we have the opposite – higher listings and lower volumes … clearly pre-telling a leveling or downturn in prices.

©Ozzie Jurock May 05 2010

Mud Slides

The result is that Realtors® are stuck between a rock and a hard place. We know the market is changing and we know that the correct action current sellers should take in order to get the most money for their property, is to act quickly to stay ahead of the future mud slide of falling prices. Yet, when this scenario is played out in front of sellers their reticence to believe that change is upon us precludes them from making a prudent decision.

As if stomping their feet will stop the change often this situation creates this counter response – ‘if we don’t get the price we want, then we’ll just take it off the market.’ To a Realtor®, hearing these words is similar to climbing a mud slide in motion. Regardless of efforts to assist in understanding, you always end up flat on the road under a big rock with few options. It’s either become an annoyance to that seller and persist in seeking weekly price reductions or cancel the listing.

Staged Marketing

Realtors® can’t change a market but when selling, it is inevitable that things work better if there is a marketing plan. While the choice of each Realtor® is to accept or decline ‘mud slide’ listings, there is if reason prevails, an alternative.

I refer to it as a staged marketing plan. Such a plan when agreed to by both the seller and the agent allows for quick adjustments in a changing market. Included in the plan is an optimum price and a bottom price. The optimum’s objective is to get the seller the most money in the shortest time. A staged plan is premised on predefined periods during which price re-scheduling is to take place should the home not sell. The plan is one the Seller must clearly understand has but one goal – to get their home sold at the best price possible in the shortest time.

Ayn does not mean Any

Sellers in any market know they do not have to accept an offer that does not meet their aspirations however, if the objective is to sell, then it should also be clear, that you can’t always get what you want.

In the words of Ayn Rand (1905 – 1982) -

‘You can avoid reality, but you cannot avoid the consequences of avoiding reality.’