Don’t do this to yourself

Two reported contracts caught my eye this morning because they both illustrate the agony caused by holding out for the ‘right” selling price. Now I may be entirely wrong, here, and the sellers may have been perfectly content to stay with their property until someone met their price, but, given the desparity between the original asking price and the last price, it’s a fair assumption that the sellers should have moved more quickly to adjust their wishes to reality.

44 Calhoun Drive was first listed on March 24,2006 for $6,200,000 and was last listed at $4,495,000. It went to contract yesterday, 2 1/2 years after first being offered, for no more than its last asking price and probably less.

Same story with 11 Hettiefred Road, in western Greenwich. Nice construction (over) priced at $3,375,000 way back in August 2006 and finally under contract yesterday for, at most, the latest price of $2,349,000.

I’ve always counseled clients to try their best to hit the market with the right price the first time – a listing is only new once, and grows stale with time – but if you or your agent make a mistake it will be immediately apparent. Do not wait for “the right buyer”, the one you think will wander in, fall in love with the place and pay more than it’s worth; that buyer isn’t coming. Do cut your losses, right away. Slash that sucker, and not in $15,000 increments, which only invites a death of a thousand slices. Move it, move on.

Greenwich Round Up Scoops the town papers

The local blog (hit link above, then scroll down a bit) has been reporting for several days on a story that our local press missed: the strange case of the purported Rockefeller who seems, besides being a kidnapper of his own daughter, to be a German con artist and murderer, wanted for questioning in California since 1988 (or thereabouts) when his landlord’s body was found buried in his backyard. Roundup dug up a Greenwich connection to all this and was reporting on it all while the “real press” worried about wiffleball tournaments. The latter may be more family oriented, but give me corpses and con men,any day.

Whither, or wither the market?

Heck if I know. Interest rates are higher than they were although, at 6.5%, I find it hard to be too sympathetic toward buyers – when I graduated and bought my first house, my mortgage was 14% and that “special” rate was granted only because my new law firm represented the bank. But credit remains elusive, and the only two players in the mortgage market, Freddie Mac and Fannie Mae, don’t lend in amounts that will do Greenwich buyers much good. I don’t see that changing in the near future. In fact,Freddie Mac just announced dismal financials for the last quarter and sees no turn around in sight. Pakistan is impeaching Musharraf, which won’t do much for stability in that region and Israel appears to be readying a nuclear strike against Iran. Add the possibility of a veto-proof Democratic majority in the Senate and House, plus Obama, and things don’t look all that swell.

But despite all this, it might still be a reasonable time to buy. No one, particularly me, can predict the future, and it’s not entirely irrational, I hope, for you to expect that you’ll hold onto your job, that income will keep flowing in and that you’ll continue to have a family who you want to house. So should you wait for what you think will be the bottom of the market? Here’s a little financial exercise that might give you perspective.

Suppose that last year you found a house that you liked for $500,000 (feel free to add zeros to these sums until you’ve reached Greenwich pricing). Interest rates were 5.5%, and assuming an 80/20 loan to value ratio, your monthly payment, principal and interest, would have been $3,406.73. This year, that house has dropped 10% to $450,000 but interest rates have climbed to 6.5%, yielding a P&I payment of $3,237.57. You’ve stayed in a house that you didn’t want to own (or rent) and saved $169 a month. If that sum is enough to make or break you, you probably have no business buying this house to begin with.

So buy now or not? Prices may continue to drop, and my personal suspicion is that they will, but I don’t anticipate a free-fall. And remember, while the price of the house you want to buy may be dropping, so is the price of the current house you want to sell. Interest rates and property values may go up or down – you won’t get a sure-proof guarantee from me or any real economist but it’s often the case that the two move in opposite directions. Over the long run, Greenwich real estate has always held its value and I don’t see that changing. I might not rush out to buy a condominium in Las Vegas or Naples, Florida right now, but if I were looking to raise a family here and planned on staying put for 5-15 years, I’d buy here again.