Public Information

In an otherwise-sympathetic posting, a commentator suggests that this blog isn’t helping the market because I report actual information, rather than permitting buyers to dream. The reader is out of touch with the realities of today’s marketplace.

There was a time when realtors held the key to all information concerning listings and selling prices and I’m sure they loved that monopoly because if a buyer wanted to know about a house, he was forced to come to an agent. By the time I entered this business 6-7 years ago, the Internet was shoving that business aside and that transformation is now complete (in a plug for my current employer, the main reason I switched to his firm is that he saw this, and began building up a fantastic website years ago - it improves all the time). Today, buyers prowl the internet when they begin their search and by the time they contact an agent they already know what’s for sale (except for Sotheby’s listings – Soetheby’s for competitive reasons, refuses to release its listings to the Internet – if I were a Sotheby’s customer who wanted my house exposed to as broad a pool of potential buyers as possible, I’d fire them, but that’s just me). They know what’s for sale, what’s sold, what the average price per square foot is in any particular neighborhood (and in no neighborhood does it even approach $1,000 – sorry, Monkey) etc. So what can an agent offer today to justify his pay? More information. At the very least, he or she should know at least as much as his customer – many don’t – and ideally, much more, by virtue of staying ontop of the market hourly or daily.

It’s obvious, judging from some comments, that some of what I reveal here is news to sellers – I assure you, buyers aren’t surprised. Here’s the Monkey again, answering his own question, funny enough, in another post explaining his view of the world:

I had my property on the market for 180 days and buyers repeatedly low balled my asking price by $3mm-$5mm! Do I look stupid?!?!?

Imagine, in this market, having a house that actually attracts multiple bids over time  your house must be remarkable indeed. But if every single buyer tells you that your house is worth $3-$5 million less than you think it is, you have a choice: you can accept what the market is saying and adjust your price accordingly or you can stubbornly inisist that the market is wrong and that you’re right. Guess which path will result in a sale?

I’ve been advising readers for months that this is not the time to sell their house if they don’t have to or don’t want to. Certainly, the price of anything you might want to buy as a replacement will also be down, but if you’re trading down, rather than up, you’re going to feel pain. What I will never advise is that you list your house at a dreamed-for number and then complain when buyers don’t share your dream. As Monkey admits, that’s just stupid.

So I plead not guilty to causing any part of the drop in prices. The Buyers decide, I report. Period. If your own agent isn’t giving you the same information, perhaps you should ask her to.

12 Comments

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12 responses to “Public Information

  1. anonymous

    Suspect most sellers today, even in Greenwich, aren’t as liquid, non-distressed or economically rational as they’d like to pretend….Game Theory 101, no?

    After all, senior GS partners are trying to sell $50MM+ (ask) wkend houses….unlikely to want to try to sell such white-elephant stuff in a deep recession unless truly in distress vs margin calls….happens to many allegedly wealthy guys in today’s credit crisis and meltdown….little fellas try to sell their <$10MM Greenwich house; distressed (former) titans try to unload their $25MM+ houses and G550s….

    Chris, any reason you seem to use cost per square foot metrics? Seems like land cost per acre (and quantity of land) varies dramatically across Greenwich….and much variation exists in costs of structure (again, both quality and quantity)….

    • christopherfountain

      Some buyers like to use cost per square foot analysis so I like to have that information handy. It’s very common out west, for instance and if a buyer’s bought in Colorado, he often wants to use a cost basis he’s already familiar with. Of course you’re right, that cost per square foot in one neighborhood can be totally different from cost somewhere else, but it’s a data point – even if the quality of one house is exceptional, and would sell for $900 sf in, say, Belle Haven, that same house, priced at that same cost per foot on Cat Rock, where cost might average $400 (a top of the head figure), the house is going to look way over-priced, no matter how many gold faucets it has.
      So I uses it as one element in comparison shopping – but just one.

  2. Inagua

    I live in Montecito, California, which is similar to Greenwich, but smaller. There are plenty of Monkeys listing and not selling houses at ridiculous prices, but there is also a reasonably vibrant market for serious sellers. Number of transactions was down in 2008, but those houses sold for an average of about 95% of asking price in an average of about 100 days.

  3. Anonymous

    Who’s the monkey Mr. Fountain? The guy living in a $17mm home or the guy running a blog that’s preaching the death of Greenwich?

  4. Anonymous

    Chris why does the $3-5mm discount offer reflect the true market? I have a large quality home on a great piece of land. Comps for similar homes have not traded at these levels so why should I hit a low ball bid? Some buyers are playing in a league way over their heads. If their budget is $6-$8mm why on earth are they wasting everyone’s time by looking at $15mm homes and submitting bogus offers 40-50% below ask?!?! Now you expect me accept this as actual value? Go screw yourself! The problem is crappy brokers such as yourself that mislead the public.

  5. ff

    $ per SF is a city construct – since there is no land value to a condo in Manhattan, $ per SF is a real apples-to-apples comparison. Nice amenities and location command a higher amount, garbage and “needs work” go the other direction. However, a 3,000 SF house on 10 acres anywhere in Greenwich is probably not worth $3 million, and this number can be off significantly based on whether it is in a 4 acre zone or an R6 zone. That’s why $psf is rarely used in the outer boroughs on NYC, fancy neighborhoods excepted.

    I think the increase of New York buyers and brokers spurred on this practice, abetted by builders needing to justify unreasonable prices to banks just dying to find a reason, any reason, to approve that loan in 2006. (“So what if your comps are $3 million – the ‘market’ is $1000 a square foot! Lend me $5 million)

    I’ve tried to make it work – it doesn’t ever make sense unless the comparisons are identical for lot size, neighborhood, location, age, and in which case they’re probably what we called in the olden days “comps”

  6. W.

    Agents:

    As a buyer, I already have an attorney and a mortgage broker. The question you should ask is what value can you provide that these other advisors don’t? If you are a good agent, the answer should be easy. Unfortunately, many agents never seem to ask themselves this question.

    Sellers:

    You might have sold in 2005 but didn’t. Circumstances change. Imagine if you had sold last summer– not 2005, but certainly better than now. Now think about what things will be like in 6 months.

  7. fred

    “If your own agent isn’t giving you the same information, perhaps you should ask her to.”

    -her?
    OUCH!

  8. gideonfountain

    As I’ve said before, I have a handful of offers out there but no takers. Sellers refusing offers is normal. At some point, my buyers will come up a bit and/or these sellers will come down, also normal! Meanwhile, my buyers are “learning” by this process. They now know what price absolutely WON’T be accepted. This blog has some influence but the biggest factor remains the same: human psychology. Nothing to be angry about.

  9. Mad Monkey

    “Nothing to be angry about”????

    These greedy bottom fishing buyers are trying to take food out of my kids’ mouths! $3mm-$5mm below asking? I don’t even bother with a counter. Screw them. They’ll be paying 15% higher in 2012! Mark my words CF!

  10. Cos Cobber

    Perhaps you need an agent who can better screen your prospective buyers. You should require a questionnaire; first question: “Before you see this house, will you do the owner the honorable thing and refrain from making an offer more than 5% below the asking price?” Of course, once you sell at $17m, I trust you will be doing the same honorable deed and only paying full price for the next camp.

    Well, good news is ahead for your agent. If he/she manages to sell your home, sounds like you’ll be easy to please on the buy side, paying top dollar, of course for the very best.

    PS – how did that work for the Japanese when they bought Rockefellar Center.

  11. Leaded

    “These greedy bottom fishing buyers are trying to take food out of my kids’ mouths!”

    HA! That’s pretty funny, Monkey. Kinda reminds me of Latrell Sprewell’s comment when offered a $21mm contract extension: “I’ve got my family to feed.”

    How much do kids eat nowadays? Obesity’s an epidemic, you know…