Stupid, stubborn sellers

Not my clients, so no skin off my nose, but there’s a house for sale on what I would consider an inferior street, or at least, not one of our most prestigious, that’s been for sale for 455 days. Grossly overpriced originally, it’s taken only one price cut in that time and is now offered at, say (numbers altered a bit to disguise the guilty)  $4.6 million, a particularly dead price zone right now. Someone else’s buyer just offered $4.3, all cash, closing at the seller’s timing, and was told that the owner was “insulted” by the offer and “when you’re ready to make a serious offer, we’ll entertain it”.

The fact that their listing broker joined them in this asinine response shows that they have exactly the agent they deserve.

67 Comments

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67 responses to “Stupid, stubborn sellers

  1. Anonymous

    What is missing from the story? This seems ridiculous if they were seriously selling or they owe the bank more than the offered amount. Then they would have to have a short sale. Either way, how can a legitimate seller act this way?

    • Not a short sale, so why they would leave their house on the market and subject themselves to all the disruptions that come with having to show a house almost baffles me. I say “almost” because this breath-taking stupidity is not all that uncommon. If this house ever does sell I may disclose the address and the agent but for now, it’s just an amusing example of what goes on out there.

  2. xyzzy

    Wow, 93% all cash bid is an insult? Amazing.

  3. Anonymous

    RS or OG?

  4. Westchesterer

    I’d rather be insulted, than ignored, considering it’s been sitting there for over year. Seems like he thinks he caught a buyer and want to squeeze him. You should tell your clients to lower their offer and make it a final offer.

  5. The New Normal

    300k is nothing to sneeze at, especially if you are downsizing and this is your retirement nest egg, and in reality the market is firming up and this upcoming spring is expected to be a buying frenzy

    • You and the seller would obviously get along well.

      • The New Normal

        why sell in January? the answer, in reality, is it makes no sense unless you think prices will decline from these levels, which seems unlikely

        • I disagree, but it’s your house.

        • The New Normal

          I have been posting on here long enough for you to know I am not the seller, or a broker for that matter

          money is being put to work and being taken out of bond funds (which have seen strong inflows for over a decade) and into stocks, gold, anything that will provide a superior yield or return

          rental properties are part of that equation and the people that have been on the sidelines will continue to join the new first time buyers in bidding for inventory that is shrinking

          stocks are about to make new all time highs – people are being forced to buy and ousing will be dragged along for the ride (even Fairfield Co)

    • James Savour

      a buying frenzy ? Can’t wait- will remember I heard it here first-

    • Atticus

      Reality Check:
      Fairfield County has another 20-30% to fall. Fewer sellers can sell w/o bank approval so it looks like the market is firming but it’s not because there are years of shadow inventory out there.

      • The New Normal

        keep renting – I am sure you will capitulate at higher levels than here

        • Oh my god, New, don’t tell me you’re one of those, “the spring will bring higher prices” sort. Do you use statistics to support this delusion or just sniff chicken entrails?

        • The New Normal

          it is merely a numbers game: more people actually look to buy homes in the spring than during the coldest winter in 5+ years

          sorry that is the reality

        • New, you are laboring under a misimpression. Here are some data for contract dates in Greenwich:
          Jan – Mar Apr-June
          2009 35 100
          2010 100 188
          2011 135 188

          So yes, there are more in the spring, but there’s a lot of activity in the first three months (ignore 2009, when the market was stone-cold dead). Further, if you’ve ever been in the business you’ll know that it can take months – 3 is not uncommon – to show enough houses to clients before they’re comfortable in bidding. I assure you, many of those contracts you see in the spring were made by people who’d been out looking for quite a while. It’d be nice if we could take buyers out on a nice Saturday in May and end the day with the house they want, but that doesn’t happen.
          So if your house isn’t on the market in the winter, the buyers aren’t seeing it.
          Finally, and while acknowledging that anecdotal evidence isn’t worth much, I’ll have extended three offers to purchase on behalf of clients by the end of next week. If they’re accepted, and I have every reason to believe that they will be, there will be three fewer buyers gone in January and no longer available for the “spring” market you’re waiting to begin.

        • The New Normal

          I am not a real estate professional, but I would estimate that most of the volume starts to pick up around end of Feb/early Mar at the earliest so you should shift your stats by one month and see the results

          We are in the dead of winter – it is 20 degrees outside; if I were the seller, I’d rather take my chances when you don’t need to be dressed like an eskimo to properly see a property

        • See my previous reply. I was out with buyers today (and we extended an offer as the result), I was out on Wednesday with another buyer; we’re working on some costs but will probably put out an offer early next week, I was out with buyers on Monday, and I’ll have an offer out on their behalf tonight, and I’m busy showing a fifth client houses tomorrow. That’s just me – there are 1,000 agents in town.

        • The New Normal

          kudos to your fluorishing franchise

          if you are really trying to prove that foot traffic during January is anywhere near March in a typical year then I am pretty sure you will have difficulty doing so

        • Atticus

          Abnormal, even someone like you should recognize that interest rates scream that you are totally wrong.

        • The New Normal

          Atticus,

          why don’t you enlighten us with what interest rates are telling us – I am sure your opinion is somehow much more relevant than every other investment professional – and while you are at it explain how sustainable negative real interest rates are without affecting said interest rates and what that will mean to valuations of assets and future flow of funds?

    • Westchesterer

      300k is only in the sellers head. An offer of 90%+ of ask is not an insult. If he thinks it’s worth more, he should raise the asking price.

  6. Libertarian Advocate

    The seller’s feigned outrage and lack of market comprehension suggests that they are Hopian zombies.

  7. WorthyChief

    How many times have brokers heard “But the Spring will save us!”?

    • Not reality here, and that’s what counts, here.

      • The New Normal

        things are getting better and there are increasingly fewer places to put money to work

        people who are shopping in the Greenwich market actually have disposable income – they are not living hand to mouth – and they are going to invest where they see value, and that typically means investments that have been underperforming recently

    • Atticus

      Interest rates tell you that the NYTimes are you are wrong.

      • The New Normal

        interest rates tell you the Fed is keeping real rates negative to prevent deflation and let the economy deleverage without deleterious affects (e.g. Japan) – they do so via ZIRP and asset purchases (bonds) or QE

    • The New Normal

      you should show the graph of housing starts (supply) – it has dropped even more, which is why prices are rising nationally

      • Atticus

        Prices are rising because a limited number of sellers can sell w/o bank approval because they owe more than the loan. Banks don’t want to because that means recognizing losses.

        They’re stretching out the housing bust, already greater than during the 1930’s Roosevelt Depression.

        • The New Normal

          oh so prices are rising now (not falling 20-30%)

          and what is going to stop them from rising? banks all of a sudden will be “forced” to liquidate REO?

  8. GreenITCH

    • The US housing recovery broadened significantly in 2012. Stronger multi-family starts were complemented by an upturn in single family starts and rising house prices. Residential investment has added to real GDP growth for seven consecutive quarters.
    • We look for the recovery in US housing markets to continue over the forecast horizon: increased start activity, modest home price appreciation, and further cleansing of distressed and foreclosed inventory.
    • We forecast national home price indices that include distressed and non-distressed prices to rise 6-7% in 2013 and 5-6% in 2014, as any downward pressure from foreclosed properties entering the market will likely be more than offset by improved demand and lean inventories. Not my work but this very consistent with what Wall street thinks

    • The New Normal

      I understand the thesis that the NYC metro area is different due to the secular downturn in financial services that had helped create bubble-like prices pre-crisis

      but we are at an inflection point, where interest rates have started to rise and risk assets are generating significant returns such that investors in “safe” assets (cash, bonds) will not only underperform but start to see negative returns (especially in real, inflation-adjusted terms)

      the trade up market is starting to show signs of revival and all the low-hanging fruit from employment redudancy was laid off years ago (the corporate survivors at this point have delevered or saved enough to take the next step)

  9. AJ

    By the time he gets his price, inflation will have rendered it meaningless. Once he got a fish on his line, you think he would have at least tried playing it? Guess he’s bullish. He’ll not be kicking himself in the ass for selling just before the market got hot, that’s for certain.

  10. Anonymous

    New, I started to ignore the naysayers on this site about 2 years ago. Four years ago I told them equities were the buy of lifetime, they laughed, said we were only going down yada, yada. Now equities are up over 100% and they missed the train. Don’t waste your time with the losers here but come back to rub it in a few years from now.

  11. Anonymous

    I think the market is going up. The $4.6 million person will get the asking by waiting. Stocks are back up to where they were; NY City is back up to where it was or pretty close for family sized apartments. There is not much out there that is undervalued and a historically above average performer other than the burbs like Greenwich. My prediction -Greenwich prices start to rise and reach the bubble point from which they fell in the next 3-4 years. Maybe not at all price ranges, but the lower price ranges now are under heavy pressure from too many buyers and too little product throughout Greenwich.

  12. Anonymous

    Equities are up over 1, 2, 3, 4, 5 and 10 year periods. 10 years is not trading, it’s holding longer than most people hold a house.

    • If you say so. I may pen something this weekend about the disappearance of the fundamental precepts I thought the world rested upon and how mystifying it is to me that the world just keeps on going as though nothing has happened. I see Wily Coyote six feet over the cliff still running in air – Wall Street doesn’t. So far, Wall Street’s having the last laugh.

  13. TraderVic

    Oh please New Normal. I must weigh in here. It is all fine and well to say that the stock and bond markets may do well for a while but every savvy investor knows this is due to Bernanke’s QE, which will end badly. The rise is temporary. Smart players know that long term investments (like a house) should be entered into ONLY if it is really truly a good deal, as well as where you want to plant yourself for a long time.

    • The New Normal

      your point is valid but only underscores an investor’s rational response to buy real estate financed by a fixed rate mortgage instead of being long cash and bonds (which they are now)

  14. Anonymous

    Aside from Riverside and Old Greenwich we are sitting at 2003 prices and that ignores inflation over the last 10 years and a larger increase in materials cost for construction (mitigated somewhat by less mark up for contractors and builders). Prices could rally 10% from here and still be nowhere near the 2007 highs.

  15. Anon

    Brokers are desperate bunch and will do and say anything to get the commish. Like Carl Icahn said today, “if you want a friend, go get a dog.” The seller may feel Spring will be a better market to sell at his price. I know of some instances this winter where the buyer came running back like a quivering fool and lifter the seller’s price after having “walked away.”

  16. ShedLessToolMan

    I tend to think the CF is biased as he is mostly a buyer’s broker.. and thus is motivated to try and create propaganda to motivate sellers to lower prices and speed up their potential listing times.. He needs 2 things.. lots of supply and low prices.. He has lots of buyers and needs to make it easier to put them into homes,, now then, If you are a seller or mostly sale side broker I suppose you are more incentivized by less inventory and higher prices..

    However, in this case I agree with CF. All the greenwich activity lately seems to be long sitting inventory with price drops. I do not see new overpriced listings selling or overpriced inventory moving without drops..

    Yes the real estate market is improving.. but, the devil is in the details.. if you look at the case shiller index, pay attention to the geographic breakdown.. Miami, nevada, arizona are on fire with huge increases.. northeast has been rather stagnant lately.. boston, NY.. not really a factor in that national number that gets quoted.. so, on the price, I agree with CF, especially if it is cash.. at the very least he should counter to keep the discussion going..

    as for the point of how to time a listing.. I think that is really unique to each situation.. I don’t think people really wait because they can get more money or more traffic in a few months.. I would think intuitively the timing of a listing more so revolves around a job change, school term, family issue, money problem, etc.. if there is no real urgent motivating factor than I tend to agree with CF that sooner is better as these things do take time and you do have less inventory competition at the moment..

    • The only thing I’d add, Shedless, is that I have in the past listed and sold many properties. I haven’t taken a listing in the past few years because I knew – or, to be fair, thought I knew – that I couldn’t get the prices the owners wanted. Better to let some other agent spend the time and resources in that futile attempt, I figure. When owners regain rationality or when the market raises values back to a level that matches their expectations, I’ll be happy to resume taking listings. Hell I’d do it today with a property at the right price.

  17. just_looking

    @ shedlees, or CF is a buyers broker because he has the opinions thst he holds.

  18. life size

    New- maybe you should move to Equidor. Seem like its too cold for yor brain to function!

  19. Anonymous

    What does everyone see happening in the lower price ranges? There is no inventory and anything decently priced seems to be flying off the shelves. What do all the buyers who show up in the spring for the lower price ranges do? Go to another town? Thoughts?

    • I’m working with four of them, so I’ll let you know.

    • The New Normal

      ultimately they will be forced to look at less expensive areas, which is what happens every up cycle

      • Anonymous

        I think shortage is what starts the price increases. I bought in the under $1 million range at the end of the summer for investment and felt the pressure to get the deal done. I started looking in the middle of the summer and came late to the party. Things were starting to go quickly, especially downtown. I was surprised no one took the deal away from me.

        It has got to be, with 12 houses on the market from $800,000 to $1 million and another 13 from $1 million to 1.2 million that there is upward pressure in these price ranges. As you go up in each $200,000 increment for the next few notches, there are similarly few houses.

        My sellers lost money, taking into account inflation, after holding the house for more than 25 years. I think what I bought is very undervalued, but we will see. At any rate, I can break even on rent.

        What I bought is much cheaper than comparable Westchester towns. I can rent for $1,000 less than the same house in Westchester and break even. So basically, my house is the cheapest in the area that has good schools. That is why Greenwich is undervalued.

  20. Anonymous

    I have been following this blog for years and have never commented, until now. Over those years I have agreed with CF much more than disagreed with him. That said, I do agree with New Normal at this point in time. I would just caution CF, and others, not to get caught up in the natural human behavior of “group think” and backward looking analysis to predict future events. Regardless of why headwinds are turning into tailwinds for the economy and growth (QE, low rates, etc.) it is working and when things finally do turn they tend to move more dramatically then most predict/forecast (both on the upside and downside). This certainly does not mean there will not be associated volatilty with this sea change however, the table is set and this time will be no different.

    • Atticus

      Down cycles have always been as long or longer than up cycles.

      This time demographics are also against you. Big time.

      • The New Normal

        you should study history

        start with any generally accepted price index, and then let us know if down cycles are indeed as long or longer than up cycles

        intuitively it would make little sense, if there is an upward bias in prices (both in real and nominal terms)

  21. ShedLessToolMan

    New normal and Anonymous guy above.. I think you both assume the Greenwich real estate market to be efficient with respect to pricing. Unfortunately, Greenwich real estate is not a standardized commodity and a property is only worth what somebody is willing to pay… and even though somebody may be willing to pay more today than yesterday, with certain unrealistic sellers it will still not matter if the market is up 10% in a year if their house is perceived to be 25% over valued.

    I think a strong CF service of this blog is to point out his opinion on fair pricing and over-pricings with his long history of experience and expertise.. and that is most likely why he is such a strong buyer’s broker.. We all agree the market as a whole is moving in a positive direction but, there is a magnitude and a reality to this movement.. let’s not all get ahead of ourselves…

  22. Anonymous

    ShedLess, I completely agree with you. This is a situation where we both can be correct. The sellers who refuse to be realistic in their asking prices will not sell their houses, no matter that things are looking up. I will say that many sellers have reluctantly been walking prices down, and as those homes clear supply/demand dynamics do come into play. I assure you that I am not getting overly excited and calling for a return of 2006/07 prices, however, (as CF always points out) as good houses get priced appropriately they will find buyers. I just caution those who do not make distinctions between those homes that have come closer to reality and those that remain well overpriced may very well miss the forest for the trees.

    I see it all the time, after what we just went through with the housing crisis, people tend to look for a “black swan” event behind every rock (they rarely are). Because of that they make no distinctions and paint everything with the same brush, that being brush in this circumstance is that all real estate is still overvalued by 20-30% and therefore only fools would buy in this market.

    I might add that they have been doing that with the equity markets as well, despite the fact that much of the tail risk has been eradicated, particularly in Europe.

  23. Anonymous

    If a house that is 25% below its 2006/2007 peak price increases in price by 10% (a meaningful increase) that still leaves it 17.5% below the 2006/2007 price. I think both sides of the debate can be correct here, market can rally meaningfully but still not return to the peak anytime soon.

    Either way a seller who gets a cash offer at 90% of his asking price does not have to sell, but he is plain rude if he insults the person making the offer. I mean why not just politely decline?

    • That’s the mystery to me – why not a simple “thank you, we’re standing at our price?” As I’ve told readers for years, the “nobody’s going to steal my house!” reaction is silly – no one’s trying to steal your house, they’re offering you millions of dollars for it. If it’s not enough, then just say no. Besides, as I’ve also pointed out here over the years, strong markets and weak, your opinion of your house’s value might be wrong, and a year from now you might wish that pleasant fellow with all that money would return.