Seller disconnect

Greenwich Time has a good follow-up article on buyers and sellers that were interviewed last summer. (Attn. readers: hare lip alert). There’s much of value here, including agent Max Wiesen’s contention that new listings are “shockingly overpriced”. I used to be viciously attacked for expressing that sentiment – it’s common knowledge now, I guess. But here’s a sad situation:

Timothy and Barbara Nolan’s home on Cotswood Road is still on the market after being listed for $2.99 million in August.The five-bedroom, 4,000-square-foot contemporary house on 1.13 acres of property has gone through two price cuts since then, to $2.79 million in mid-fall and then recently to $2.48 million.

Barbara Nolan, 77, and her husband, Timothy, 84, had been hoping to downsize to a smaller place in town, and also spend more time in Florida.Barbara Nolan said while she knew the market was down, the price cuts were still difficult to make, since she and her husband have loved the home they built together 33 years ago in a rural setting where deer and wild turkeys roam the property, but still very close to town.

“It really has very special qualities,” Barbara Nolan said. “I can’t understand why people wouldn’t love it as much as I do.”

The couple is also getting impatient — they want to start looking for their new Greenwich home, so they can enjoy their retirement without the burden of keeping up with a big house.”I want to know where I’m going to be,” she said. “I want to be settled.”

That’s sad because it is a nice house – but one that was overpriced to begin with due, no doubt precisely to the owners’ affection for their home. Objectivity is the key here, and that is provided by buyers, not sellers. If Dr. and Mrs. Nolan want to move on, they’ll have to let go of their idea of what their house is worth, and leave it to the market. And that must be very hard to do.


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14 responses to “Seller disconnect

  1. Greenwich Ex-Pat

    “If Dr. and Mrs. Nolan want to move on, they’ll have to let go of their idea of what their house is worth, and leave it to the market. And that must be very hard to do.”

    It seems to be very hard for a lot of people, and the banks as well. I was reading an article last night on the wave of upcoming foreclosures and how the housing market is going to get a whole lot worse, partly due to the shadow inventory being held by the banks (the shadow inventory includes potential foreclosures the banks have been dragging their feet on, plus the inventory being held back to prop up the prices, in anticipation of better times, etc.) Had banks been forced to dump their inventory at market prices, there would have been a collapse in the market, yes, but the bottom would have been reached and prices on their way back up by now. IMO, anyway.

  2. Greenwich Ex-Pat

    Just curious, C, what would you advise these people if they were your clients? At what price could they realistically sell, right now, and then where or what would you suggest they buy in the Greenwich area?

  3. Peg

    Good advice.

    It isn’t that people don’t “love the special qualities.” It’s that the market overall has taken a big hit – and almost all homes aren’t quite “special” enough to overcome that downturn.

    If you’re working with sellers, it’s painful for almost all of them to grasp what has happened to markets. If you’re working with buyers – smiles around!

  4. Anonymous

    Just saw this..not sure of the source but very interesting…I am not going to offer full price for a house anytime soon!!!

    This is a cut and Paste:

    Heartened by the recent rise in home prices? Don’t get too comfortable. Standard & Poor’s, the credit-rating agency that tells investors what mortgage-backed securities are worth, reports that the increase was just an illusion. It predicts the nation is about to see a deluge of new foreclosures that will drive real estate values back down.

    Blame the “shadow inventory” – nearly 1.8 million homes that are on the road to foreclosure but for all kinds of reasons haven’t gotten there yet.

    Many homeowners have fallen behind on their mortgages or stopped paying, but foreclosure has not yet arrived. Mortgage servicers, the folks who send you the bills and file for foreclosure when you can’t pay them, are overwhelmed. Courts, too, are backed up. Mortgage modifications and foreclosure moratoriums have put off the day of reckoning for borrowers, but not forever. And unemployment is sabotaging more homeowners every day.

    Out of more than $1.6 trillion in existing mortgages that were packaged into mortgage-backed securities by Wall Street, some $425 billion worth are extremely late on their payments, and therefore likely to go into foreclosure. Only a fraction of borrowers who fall seriously behind are able to catch up, with the help of a loan modification. And even then the majority end up falling behind again. That amount of bad mortgage debt has been spiking up every month, slowing down just a little thanks to the government’s Home Affordable Modification Program, but still continuing to rise.

    Meanwhile, even as the amount of unpaid mortgage debt rises, the number of foreclosed, bank-owned homes for sale has been holding fairly steady. That tells us that the number of foreclosures for sale on the market is actually just a sliver of all the ones that are really out there. S&P’s chilling conclusion: “Overall, it is our opinion that recent positive housing reports should not be construed as a sign that the distress in the residential housing market is abating, but rather should be attributed to the temporarily limited supply of homes on the market.”

    The bottom line: just counting the homeowners who are currently behind on their mortgages, along with the existing number of foreclosures for sale, at the current pace it will take nearly three years to sell all the foreclosures out there. That doesn’t include all the borrowers who haven’t fallen behind yet but are going to, because of unemployment or because their Option ARM payments are spiking up or because they just decide to stop paying.

    The shadow inventory is equal to half the size of the entire market of homes for sale. When it starts getting listed, expect home prices in areas with lots of foreclosures to plummet. Yes, more.

  5. Greenwich Ex-Pat

    Anonymous, that’s the article I was referring to. Thanks for posting.

  6. Retired IB'er

    Oh please, “my house is special” because “little Johnny threw up on the carpet over there” and cutie pie Cindy “had her tea parties over there” is as old as the hills and equally stupid. Right up there with, “but our town is special”!

    It’s all about supply and demand. That will determine the clearing price and nothing more: especially not the memories/perceptions of the sellers’ thirty years .

    I have never understood why the vast majority of people see the sale of their home has more than what it is: a business transaction. All the rest is emotional nonsense and simply gets in the way.

  7. Anonymous

    Not sure who’s more retarded…the seller hoping that a buyer will pay for an “emotionally special” used house or legendary suburb…or the buyer of any used house who doesn’t just view it as a land buy

  8. foobar

    hilarious that people think just because turkeys once roamed in their backyard that makes it special. But let’s look at Zillow, which estimates the house at 2.092mm. I have been following their estimates for almost 2 years now, and while they are not perfect I would guess that a 10% band on either side covers 95% of the transactions – so this house might have a range of 1.9-2.3MM based on that rule. So I conclude that they have finally lowered their offer to a level that will likely attract bids. It is a pretty prime location though I am not familiar with the property, I would guess that range sounds right, what think you folks?

  9. foobar

    with regards to shadow inventory, folks in this area should realize that what Greenwich in particular and Connecticut in general will experience pales in comparison with the usual suspects of CA AZ FL NV. The bulk of the foreclosure action will remain there. Not to say there won’t be some here, there will be, but I consider it an opportunity for the opportunistic. Here is a case – I am closing on a property in a nearby town direct from the bank at $300G. It is a complete mess, will cost $100G to fix. The house across the street sold for $600G last summer. When I am done with it my house will be a far better home in all respects than the one across the street. I will price it at 585, all things being equal (and less of course if the market deteriorates). So I say, bring on the foreclosures – PLEASE.

  10. 14er Girl

    Anon is right on with the shadow foreclosures and how they are going to effect our market. Most banks who own foreclosures do not list the properties on the GMLS…instead use the CMLS otherwise known as the Greater Fairfield County MLS. I recently came across a house on Stanwich Road that had last been listed in the high 2’s and prior to that, in the low 3’s. Washington Mutual listed the home for 1,677,000…far below the assessment and it went to highest and best within a week, without most Greenwich agents having a clue. My clients lost out to someone who paid cash…and what deal I bet they got. But this will be a true comp once the sale is reported and I am sure they paid below market value. The same thing happened with a house in OG….only listed on the CMLS but once it hit, buyers were informed…but way too late. It seems like the banks do not care to much about using the Greenwich MLS as they can sell a house very fast without most Greenwich agents knowing it’s on the market as long as it’s on CMLS, which I moniter daily.

  11. Greenwich Ex-Pat

    14er girl, are these lower price bank-owned listings on the CMLS a fairly recent phenomenon? If so, that would indicate to me the banks are starting to unload inventory they’ve been sitting on. If I’m a banker who’s been holding back, hoping for a recovery, and I’m following the enconomic news, I’m gonna shrug and say “Ooops, I guess not” and unload. But that’s just me.

  12. Greenwich Ex-Pat

    “It seems like the banks do not care to much about using the Greenwich MLS as they can sell a house very fast without most Greenwich agents knowing it’s on the market as long as it’s on CMLS,”

    I’d think anyone selling a house, and most especially a bank, would want as much exposure as possible. I’d want most Greenwich agents to know, seems like the house would sell even faster with higher bids, maybe more cash buyers, etc. But what do I know? I don’t live there, maybe more Greenwich agents involved would slow the process down. Plus the banks don’t know doo about squat anymore, they’re so distant and divorced from the transactions. Which is actually good for folks looking for a deal, if the primary objective is to get the inventory off the books and out the door as fast as possible. It’s great if we’re at that point. Means the market can finally settle.

  13. foobar

    14er an interesting story. I believe you are referring to 173 stanwich road, which sold for 1.7MM. If so, it certainly ‘should’ have gone for at least 400G more if the bank had shown any patience. But the point made here is correct, the banks are pretty much disconnected from the local markets, especially the behemoths like Wamu/chase. Once they have a property put back to them in foreclosure, they will often offer it out at a price that gets them a recovery to their reserve on the property, ie on 173 stanwich they had written it down to 1.67, anything on top of that is gravy, and they offered it out probably as is, cash preferred 30 day close (I am speculating that last bit but that is what I have seen). Another example of these foreclosures bringing opportunity to the opportunistic!! I am following the Fairfield market very closely for foreclosures, and can only say that examples such as these in prime markets and locations are extremely rare to this point.