We received this photo yesterday from Theresa Brockway of Coldwell Banker Sea Coast Realty in Wilmington, NC.  Unfortunately she was subjected to a good ol’ fashioned montana traffic jam last time she was driving through, and she snapped this photo while waiting for ‘traffic’ to clear.  Thank you to Theresa, Kay Baker, and the whole team at CB Sea Coast!!

Last week’s team meeting produced an interesting tale of ‘overpricing woe’.  The parents of one of my associates listed their house in mid-2006 at $590,000.  The inaccurate list price was determined by their real estate agent, and the property sat on market for nearly 2 years, suffering a price drop of almost $200K.  By the time my co-worker’s family unloaded the property, they had to settle for only $400,000; this unpleasant situation could’ve been avoided if only it had initially hit the market in the correct price range.

Overpriced listings are, unfortunately, a common practice in real estate.  Some agents overprice their listings thinking they have provided themselves with “wiggle room” when it comes time to negotiate.  Other agents price too high because they are either in agreement with the seller’s over-inflated valuation, or they are “buying the listing”: an unethical practice I will expound on later in this post.

Overpricing a listing for the sake of “wiggle room” may seem like a good idea, but in the end it will only serve to hamper your selling efforts.  High priced homes do not yield as many inquiries as listings that are priced competitively; the lack of offers usually leads to several price reductions and a lengthier term on market, two factors that serve to erode the integrity of your listing.  Savvy buyers will shy away from ‘lemons’ that have sat for months on end, only moving in for the kill when the agent has reduced the price by half of its original value. 

Sometimes homes are priced too high for no other reason than the agent-seller team is in agreement.  The trick in this situation is being able to look at a property objectively, as a buyer would see it.  The seller’s viewpoint is obviously biased, but rightfully so since he/she has large sums of money invested in the property.  Oftentimes valuations of a home are inflated due to upgrades the seller has performed.  Sadly, buyers tend to not see the value in these upgrades, opting instead to modify the home themselves and therefore considering any upgrades the current owner has performed nothing more than the offering that’s on the table.  Overpricing your listing based on current homeowner upgrades has the potential to lead to the unpleasant situation where the homeowner realizes that they spent more money on upgrades than they will ever see at the time of closing.

Unethical agents will sometimes attempt what is called “buying the listing”.  This happens when the agent enters into a listing presentation with a purposefully over-inflated CMA.  Of course, since homeowners oftentimes (through no fault of their own) have inflated valuations of their property, the ‘shady’ CMA aligns with the seller’s wishes and the agent has effectively bought himself a client by knowingly catering to their unawareness. Sometimes agents enter into these situations with the intention of talking down the seller at a later date; this, also, is not a good idea since your initially over-inflated price will undermine any chance the agent has of cashing in on the “New Listing Hype”.

You will get no argument from me that this is a touchy situation.  No agent has ever won a listing by strong-arming their clients and ordering them around like green recruits.  But, the question becomes: at what point are you catering too much to the seller that you are, in fact, sabotaging the transaction?  It is the responsibility of the agent to draw on their industry expertise to protect their clients from low-ball offers, high-priced listings, and any physical harm incurred at the negotiation table. They are not only investing in your expertise, but ultimately placing their future in your hands.  It is the duty of the agent to live up to those expectations.

I am in no position to stand on a soapbox and preach a “How To” on revitalizing the real estate market. I can however let you in on today’s most un-secretive, yet still ambiguous headline that stands to be one of your greatest selling tools for 2009: The $8,000 1st Time Home Buyer’s Tax Credit.

With more than 300,000 buyers ‘coming off the fences’, one could attribute the recent industry uptick to several factors: a reduced inventory of agents which means a higher quality offering from those that remain; constant technological innovations serving to assist agents and streamline the closing process; the ‘21st Century brokerage model’, changing the game for both agents and clients; Zillow and Trulia; NAR/DOJ outcome; the list goes on and is highly debatable.

What we can all agree upon are the undeniable, long-awaited benefits of the $8,000 Tax Credit. A near-clone of the $7,500 Credit of 2008 (which was more of a low-interest loan, than anything), the $8,000 Credit is different in that it does not have to be repaid. Quick, read this article.

As you can see, I dare not exaggerate. The skinny on the $8,000 Tax Credit:

- $8,000 tax credit/refund available to first-time homebuyers (anyone who has not owned a principal residence in the last three years, and/or has/will purchase/d a home between January 1, 2009 and December 1, 2009.)
- Not to be repaid, unless taxpayer vacates residence within three years of purchase
- Taxpayer must make under $75,000 annually if filing alone; $150,000 annually if filing jointly with a spouse

Tax Credit cannot be used if:

- The home you purchased/received was purchased/received from a close family member
- Your gross income is above $75,000 if alone; $150,000 if filing jointly
- You have been in possession of a principal residence sometime on the previous three years
- The property you are looking to acquire will not serve as your principal residence

Those are just some high-level bullets as to the stipulations concerning the $8,000 Tax Credit. As you can see, it is fairly easy to attain, and applies to a large portion of America’s home buyers. The goal of the government in signing off on this Credit was to breathe some life back into the pocketbooks of our country’s consumers. Sale rates that have been free-falling since 2008 have since leveled off, and many buyers are now warming up their check-writing hands, looking for the next great deal.

Missy Caulk’s team had the right idea. The day that the false HUD comment was made (read this if you are unfamiliar with this event), one of Caulk’s team members decided to forward the information, along with info on the Tax Credit, to all of her home-searching contacts. Getting this Credit info in front of the eyes of home buyers is critical, and that’s where REALTORs come in.

The public needs to be aware and needs to be educated on the nuances of the 1st Time Home Buyer’s Tax Credit. Implemented wisely, this credit could be the deciding factor on whether or not some of 2009’s buyers will acquire a home this year. In many cases, the Tax Credit is equal or close to the full amount of a down payment. So, while the Credit cannot actually be used for down payments, it has served in many cases as a refund to the down payment. I’m saddened, actually, by the fact that I will not be able to take part in this great opportunity. Since I will not be buying a home before December 1st, 2009, I will not be eligible to receive a cool $8,000 from Capitol Hill. So sad…

However, do not let my missed opportunity be your clients’ as well. Get out there and get this info in front of them…the time to buy is now.