Vol 8 No. 3 - October 10, 2007

Change the dance and
shake things up

By Louise Bolger
sun staff writer

I was in Palm Beach last month – the town where plastic surgeons and real estate listed over $5 million are the only things making money. This was an all girls get together which we labeled "change the dance weekend," and as is typical when women get together, discussions inevitably went the course of marriage, relationships and how to keep it all new and together – hence change the dance. It got me thinking that real estate relationships are really not that different from human relationships – sometimes you need to shake things up to get it moving again or to at least face reality.

And what exactly is the reality of the real estate market we’re in? A cardinal rule of economics is that stuff is worth what it’s worth, regardless of what you paid for it. People have an irrational hatred of losing money and will avoid doing so even if it goes against their own best interest. Think about a Las Vegas gambler, still placing bets trying to get himself out of his hole only to dig it deeper.

Homeowners, who are trying to sell their homes for what their value was two years ago when they may have purchased them, are essentially doing the same thing. They are digging the hole deeper by adding on monthly expenses to a property they haven’t been able to sell and adding on the emotional expense of not being able to move on with their lives. If you find yourself in a similar situation, now’s the time to change the dance and get real.

Homeowners who want to really sell their property should list it at the market price If you don’t really want to sell, don’t put it on the market. It’s just too painful and expensive to leave a home lingering on the market at an unrealistic asking price.

Not only does having an overpriced home on the market affect individuals, it also has a tremendous impact on national and regional economies. The reality of real estate is that half of home purchases are by people moving within an area. If sellers can’t sell their houses because they want too much for them, they also can’t become buyers, creating a real estate stand-off where nothing is moving.

In addition, this kind of stand off has a negative impact on durable goods like furniture, appliances and building materials, which go hand in hand with home purchases.

All of this eventually spills over into the job market which we have seen recently with Florida’s unemployment rate ticking slightly up.

Some sellers have finally gotten the message, and there are quite a few very well prices properties on Anna Maria what are starting to move with the expectation of more activity after Thanksgiving. If you are trying to sell your home the next few months will tell the story, and the story is that only the well priced properties will be gone by the spring.

Remember when cocktail party chatter was about how high your neighbor’s home sold for, now we’re all whispering the low number our neighbor settled for. Time to change the dance and get real, if sellers don’t we’ll still be staring at the same for sale signs in May. Even the shops on Worth Avenue in Palm Beach lower their prices in September, they understand reality.

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