There has been much speculation about whether we have hit bottom in the real estate market and whether buyers should buy now or wait for lower prices. Well the answer is simple: yes and no!
I have previously blogged on the value of using a qualified real estate in these unsure times of whether or more precisely where and how to buy. There is a saying in real estate that all real estate is local. This statement may never be more true or obvious as now. There are markets in California, Las Vegas, Arizona, Michigan, and Florida where I believe there is potential for more downside based on the froth that those markets encountered two or three years ago. The St. Louis market has the benefit of not having such large price swings and is therefore more stable in general. Additionally, St Louis is home to a diverse corporate community including the likes of Monsanto, Anheuser Busch, GM, Smurfit Stone, Brown Shoe, Express Scripts, Zoltec and many more. If one area of business slows another may not be hit by recession and with jobs comes income and again stability which helps housing prices. Qualified realtors are knowledgeable about these differences and are able to use this information to help each buyer make informed decisions.
Many people forget how long we have been working our way through this "subprime crisis". It has already been more than two years. I don’t believe this downward pressure will continue for another two years. I have already witnessed increased sales in much of St Louis County and continue to see buyer interest. In fact, I believe that we are starting to see artificially low prices due in no small part to the difficulty many see in obtaining credit. Fannie Mae and Fredie Mac have started charging additional fees for people who have less than stellar credit. These fees are really meant to replenish the losses these entities took on with previous subprime loans. The underwriters anticipate that these current borrowers are of the same risk even though the buyer is buying a property at maybe a 20%-30%+- discount. Appraisers are being required to supply comparable sales that don’t exist and if they can’t the deal won’t get done. The media scares people all the time with how horrid real estate is and compare this downturn to the depression of the 1920s.
At the point where investors realize that homes can not be built for what they are being sold for (look at commodity prices) and private lenders begin lend with rational decision making we should see a significant pick up in sales. By that time many buyers will have missed the greatest opportunity of their life to buy real estate. People also forget that when Jimmy Carter was in office the prime rate was over 21%. Interest rates now have almost nowhere to go but up and with real estate prices 20%-30% of their highs this is the time to buy!
Buyers need to find a quality Realtor and negotiate the home they want. If they can live there for three to five years, I believe the upside will be 20%-30% to the upside. On a two hundred thousand dollar house you are talking about $40,000-$60,000. Keep in mind your investment might only be $20,000.
Best regards,
Nick Sepac
RE/MAX Midwest Group
Owner/Broker
This a great way to see just how much you’ll benefit from using one of our RE/MAX agents! Just click on the word benefit to view the video.
Many a buyer and seller has asked this question and many have made buying decisions that have cost them thousands of dollars and countless hours.
The following is one recent example:
I received a call from a seller who wanted me to represent him in the sale of two condos, one which was a one bedroom in need of repair and rehab in the amount $15,000+- and the other, an efficiancy, which was in saleable condition each about the same square feet in size. As I learned more about the property I came to find out that there was a bank owned condo for sale in the same building twice the size of either of the two condos I was to sell for only $10,000 more in a better location in the building.
I ended up finding a buyer for the better priced bank owned condo and therefore took that condo off the market so that my listings were the only ones available. I ended up finding an unrepresented buyer that purchased the condo that needed $15,000 worth of work. This purchase amounted to the same price as the better located bank owned condo but was half the size of the bank condo.
I felt bad for the buyer because I knew that he was overpaying by 50%+ but my loyalty was to my seller client and I had a duty only to be honest to all parties but to represent my seller. This is only one story that is replayed time and again in the real estate business.
I have been in sales for more than 20 years and have negotiated nearly every day since then with all types of people and organizations I know the St Louis real estate market and sales contracts and forms and use them as a tool or weapon, as need be, to benefit my buyer or seller.
I don’t believe that any unrepresented person buyer or seller will stand a chance in negotiating against the years of experience that I or any other real estate professional brings to their client. I believe it is a disservice that many in the news media provide to the general public the idea that you don’t need a Realtor to sell your home. The message is taken out of context! True you don’t need a Realtor, but is it wise to make some of the biggest financial decisions in your life without the expertise of a professional, and worse yet, to compete against the same professional who negotiates in this space on a daily basis?
The value of negotiating through a broker another benefit, that of having your emotions hidden. Have you ever watched professional poker players? Have you ever wondered why so many they wear those dark sunglases? It is because they know that the trained professional opposite them can read their emotions, facial tics, voice inflection etc. These are the same techniques that a trained real estate broker uses to identify how much you are willing to sell your home for or how much you will pay to buy a home. When you use a broker, the other party is rarely if ever sure about the extent of the brokers clients interest, unless there is an advantage in letting them know. Keeping the other party on a informational "need to know basis" can produce great benefits to a client.
The market has shifted and buyers are driving purchases so that sellers need to be realistic about pricing and use every tactic possible to draw in buyers. Without the experience of a quality Realtor buyers and sellers are taking a shot in the dark being penny wise and dollar foolish trying to sell their home on their own to save 5-7%+- commission while risking losing 10-20% on the transaction side.
I suppose I could practice dentistry on myself as well but I think I will leave that to the professional just as I believe real estate buyers and sellers should seek professional help.
Best regards,
Nick Sepac
RE/MAX Midwest Group
Owner/Broker
MODOT says: Dial 5-1-1 on your mobile phone!
If 5-1-1 isn’t available from your carrier, please dial 877-478-5511 (877-4STL-511).
What a great service they are providing, giving you a heads up to choose another route!
Try it, you’ll like it!
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