Do you remember the great toilet paper shortage of 1973? I’m not making this up. There really was one, but only because the media convinced the public that such a shortage existed. Here’s what happened…
Late night TV talk show host, Johnny Carson, told a joke about a toilet paper shortage. He was making it up. Only problem was, that back in the seventies, there were so many shortages (remember the lines at the gas pumps?), that the public believed him.
The next day, it was estimated that some 20 million viewers had wiped out (poor choice of words, perhaps) the toilet paper supplies in the supermarkets across the country. The point here is that if it had not been for a joke broadcast and repeated in the media, the problem would never have arisen.
Something very similar is going on within the real estate industry nowadays. The media, both national and local, are so intent on convincing the public that there’s a real problem in the real estate market, that they have, in effect, created a problem.
But don’t’ take my word for it. I stocked up on toilet paper back in 1973. We went to the experts in the industry. We spoke with John Parrish, director of marketing and communications for the Homebuilders Association of Richmond, as well as Laura Lafayette, vice president of the Richmond Association of REALTORS®. We also got input from an area REALTOR®/Broker, Vicki Lindsey. Each one shared his or her observations from their unique vantage point. You will find that they are all virtually in agreement as to the realities of the current situation, as well as what is driving the pessimism among many both inside and outside the industry. The pessimism, it seems, is based more upon perception than reality. However, perception can often become the reality. And therein lies a large part of the problem...
FROM A BROKER’S POINT OF VIEW
Vicki Lindsey has been selling real estate in the Richmond market for over twenty years. She is, in large part, the inspiration for this special feature. When we first spoke, she said she would like to tell our readers that the real estate market, here in Richmond, is much healthier than what news reports might have you believe. So, we begin with her thoughts...
OK, it is time to lower the volume on those life support systems in our homes. You know the ones, where we have them turned on and tuned in to the news, not just in one room, but in several rooms at the same time. That way, we are sure not to escape the constant hammering away at our economy, the falling housing prices, and anything else we feel we must hear 24 hours a day. As we move through our lives, we don’t want to miss one drop of this dripping of negativity. The sad truth is that the grouping together of this type of information on a national level is not at all reflective of what is happening in the Richmond market. Worse yet, I would not be surprised if those reporting about the “falling and failing” housing market were not pumping money into their real estate investment trusts to acquire more property. Investors are realizing what is happening, and buying whatever they can afford.
I recently took a sampling of the counties surrounding Richmond for the purpose of giving an overview to one of my clients. I have to say, the figures were much better than I had originally expected, and this is very good since I have remained quite optimistic about our housing market. In about 80 recent closings in one county, and these were in the price range of about 300K to 350K, only about 20 sales reflected the seller giving a closing credit to the buyer. Buyers have been lead to believe that sellers are giving away the farm, and that is just not the case. Sure, as in any market, some sellers who simply must sell will make deep concessions. But, for the most part, if the price is not what the seller is looking for, they can just stay put and not move at all.
The main reason for a seller reducing his or her price is that the buyers have more homes from which to select, and the sellers want to try to beat out those competing homes. That does not mean the value is not there. Many homes will appraise for quite a bit more than the selling price, but that is a reflection of a seller who has decided not to wait longer for his or her asking price. It is not a reflection of diminished value.
I have always believed that a price reduction is important when you are trying to overcome a specific obstacle with a particular property. If a home is on a very busy street, and does not set back significantly from the road frontage, that would be an excellent reason to price the home below the comparables. If the home has an undesirable slope, or is missing an important feature that the majority of buyers are looking for, that would be another reason. If a home simply needs to be staged or freshened up with new paint or carpet, or a new roof, I would much rather see a homeowners get the right price for their investment by maintaining the home in the first place. If, for example, several people in your subdivision have “deferred maintenance” issues and sell for way below market value, now you will have a true drop in values in that neighborhood, so it hurts everyone.
Some folks do not look at all of the data when they list their home for sale. When a home sells in one day with 5 offers, it could be that the home was put on the market so far below value that the owner lost a bundle of money. It is important to use a professional REALTOR® who will provide you with ALL of the data so you can make an informed decision. Anyone can sell a house in one day, if it is given away.
As far as the Richmond market, this is a great time to buy and hold. If you have children that will be going to college, one investment property that you purchase today and rent out will often pay for their college in full when you sell it. One investment home per child is a pretty safe plan for college tuition in my opinion.
My best advice, turn off the life support systems and turn on the music.
Vicki Lindsey, Broker/REALTOR® is a Real Estate Broker for Gold Point Real Estate, and has received the Distinguished Achiever Award every year since 1999. She previously worked in the Security Management and Investigations field for 19 years, and brings those transferable skills into the Real Estate arena. She is currently working on two books.
Continued >>
1|2|3 |
