Haha - "kerflummoxed" - I love that word!

I have no idea why someone would raise a price when it wasn't selling before at a lower price. Maybe they are playng some sort of psychological game and trying to make people think they better buy it quickly before prices go up again? It could also be that the market is getting stronger, and they have seen some comps to justify raising their price. Who knows.

Kerflummoxed- my new word of the day!
Don't worry about what they are asking... offer them what the comps are suggesting. I bet you get a bite.

Thanks, guys. Two questions: there are a lot of short sales which I'd been avoiding for obvious reasons, but I do have time to wait one out. I'd been told that banks usually aren't very willing to negotiate much on price till it's actually foreclosed though. Is that right?

Also, there's a Freddie/homesteps REO. I know they come down a lot when it's sold as part of a bundle but how willing are they to negotiate with owner-occupant buyers?

Here is a link that might be useful: kerflummoxed--didn't make it up :)

Who knows - I've been wondering the same, although in this case, it's a vacant property in the town my parents live near. It was listed for a year at $328,000. Listing expired, two weeks later, it's re-listed for $650,000. Nothing changed with the lot, no improvements made/land cleared/announcements made in the city that might cause property values to go up - just a huge price jump. It's been listed for almost 5 months at its new price. Shocker.

A realtor told us that she's seen some prices go up because buyers want a "bargain" and won't buy unless they can get a good discount off the asking price.

Conchita, where are you looking? Florida?

We are house shopping in Sarasota area and are seeing the same thing. Very strange. Lots of flips - some done well, others horrible. Then they triple the asking price. Most won't appraise.

Jane

Thanks, everyone. I don't know if I feel better or worse knowing it's not just around here. :)

Yes, Jane, I'm across the state in Stuart. I think partly it's that real estate here is so cheap compared to many places that out of state investors think they can't lose. But they can, and do. I can almost understand how people can delude themselves when it's single family, but in a condo or townhouse situation--those are generally pretty much worth what they're worth, regardless of condition. A well-appointed unit may sell faster than a gut, but it's usually not going to recoup the cost of the upgrades + a fat profit.

Well, there is a big difference between Joe Schmoe trying to flip housed for profit and someone with deep pockets truly looking for an investment.

The economy and house prices are going to turn around. It isn't a matter of if, but when. If you have deep enough pockets that you can buy up a bunch of units and just ride this out, there is some money to be made. List any units unreasonably high and see if you get any takers. If not, just hold on until the market comes up to meet your price.

For an average homeowner, that is a horrible strategy since you'll likely end up sitting on it for a couple years. If your end strategy is actually to wait it out though, raising the price bar isn't absurd.

"Well, there is a big difference between Joe Schmoe trying to flip housed for profit and someone with deep pockets truly looking for an investment. "

This.

Us dumb old farts have weathered most if the storm just fine.

We put enough down so that rent covers expenses, even if the down payments are a little painful.

There is no guarantee of making money short term in real estate.
It is the long term that you need to be able to operate through.

A lot of folks jumped on a wagon that looked to be going up and up.
When it went down they are caught short.
Many could not cover expenses with rent, and ended up paying every month on an under water property.

More conservative investors can now picking up the properties at a fraction of the former prices.

Well, as a general principle I don't disagree with what you're saying, but for where I am I would have to say that I do. This area is losing population at a fairly quick rate. There was never any industry here except real estate and construction, and those are gone with a vengeance. When I go to a store or a restaurant I never know for sure anymore that it will still be there.

My current neighbors think it's just a question of waiting till all the boomer generations start retiring to FL, but that is simply never going to happen. Most of my friends are embarrassed for me that I not only live in FL but like it. Even the few who can contemplate retirement are no more likely to want to move to FL than to suddenly start wanting a cadillac.

The other thing that has hit real estate here besides the general slump is that for a long time this area sold because if you were a working professional (teacher, fireman, etc.) with a family in the Palm Beach/Ft Lauderdale metro area, you simply could not afford a house there on your salary. So people kept going further and further north looking for something they could afford. Lots of people in this area were commuting 90 miles or more each way to work. The rise in gas prices started trouble for those folks even before the big crash.

So me, I think this is going to be more like after the FL real estate boom of the 20s, where even 40 years later there were still plenty of roads to nowhere. I sure don't delude myself that I'm making any kind of investment if I buy a house, not here.

I agree that it's probably different in other places.

Hi conchita,

You mention a particular townhouse complex that you're interested in, with some craziness going on with pricing and units not moving.

I hope you look carefully at the owner occupancy rate and also the financials for the complex. In a bad real estate market, some complexes have problems with owners not keeping up with the assessments (or walking away altogether), so other owners have to pick up the slack or services/amenities are cut.

If you do end up buying and then someday wish to sell, it could be tough to distinguish your unit since, as you say, they are all identical.

If there is anyway to swing a small house instead, you would have more maintenance resposibilities but you wouldn't be at the mercy of other owners to pay their share. And of course your property would be more unique when it comes time to sell.

Thanks very much, chicagoans. Yes, this complex is interesting that way--they were involved in a big scandal back in 1998 where the owner of the management company they'd been using retired and the guy who took over the business embezzled huge amounts of money from all the properties.

As a result, these days they're very transparent about their finances. Since the hurricanes they've managed to build back up a respectable though not great reserve and recently announced that after looking at the state of the complex the (extremely low) maintenance can stay the same for next year. It's a very large development, about 400 units, which means they can carry a few deadbeats. Usually, about 3 or 4 percent of the units are on the market at any one time, counting regular listings, short sales and REOs.

That has been a problem at several other places I've looked. I could get a much nicer brand new never-lived-in 3/2/2 for less than these (no garage here, 2BR, and they're 30 years old), for example, but the foreclosure rate in that development is close to 70%.

I've got this budgeted out so that if I can stay for seven years or so (about how long I've averaged in the places I've rented), I could literally give the place away and not be out too much more than the rent would have been (actually quite a bit less if I don't include repairs/renovations), so I'm not awfully worried about resale.

Tax write off scam?

"This area is losing population at a fairly quick rate. There was never any industry here except real estate and construction, and those are gone with a vengeance. "

So if you are purchasing an investment you think it is acceptable to lose money every month?

Prices will have to come down enough to attract investors (and create a positive cash flow) or owner-occupants.

Sorry, brickeye, I'm afraid I don't understand what you're saying.

"I'm afraid I don't understand what you're saying."

Very few investors can afford negative cash flows for a long period.

An area "losing population" is going to see large drops in home values as the market accumulates more properties for sale that cannot move.

Eventually a working price point will be reached.

Oh, okay, thanks. Yes, I do understand that. I thought maybe there was some more specific reference I wasn't getting.

A number of folks clobbered by the RE crash had made the very bad assumption RE always increases.

It goes down if the local economy takes a hit (a major emplyer closing) or can stagnate for years sometimes.

I personally know more than one person who took large hits ($20,000 to over $45,000) when the bubble popped.

One had purchased a townhouse, the other a higher end single family house.
By the time the houses had been completed the price had fallen well below what they had singed for.

Both walked away from large deposits.

One then had to move out of the SF house he was in into a town house they had been renting out, and sell that house at a small loss (luckily for them they had owned it longer, so the sale price was not horribly below the mortgage balance).

When a market is hot it is not all that hard to trun a fast buck.

You just need to be aware it will not continue forever.
It is going to decline.

If you get 'caught' it can cost all you made and more.

If you invested carefully you can ride out the short term market behavior.

If you purchased an Ebay item for $50. Wait until X-Mas and list it for Buy Now at $90 but starting bid is $60. Someone eventually will think they have a bargain and you still profit.
Foreign investors are taking advantage of their exchange rate (especially Canadians) and even 5%-10% over their original price plus exchange rate fluctations is a good profit.
Monitor the exchange rate with the CD$.

I have viewed the chaos and obscene asking pricing but they are well aware no one is going to bid full price so they wait out the best low-ball offer which is above their own purchase & carrying cost. In today's market NO ONE is offering list price so why not bad for the undercut.

Roosevelt wrote
"If you purchased an Ebay item for $50. Wait until X-Mas and list it for Buy Now at $90 but starting bid is $60. Someone eventually will think they have a bargain and you still profit."

Not if on the next screen there are dozens of comperable items listed for $50!
Same for RE.

I agree if the next screen shows items for $50 but as the OP demonstrates - what is happening is folks don't mind letting it sit on the market until someone grabs it because others are gradually increasing their prices.
I've watched a REO start at 124500, drop to 122500, after two months (with a cancel sell) go off listing and two months later back on market with a different realtor at 145500. No changes or updates but they felt lower interest rates and increase demand allows them to jack the price 20k. I doubt they will receive as much but allows for much more wiggle room.

>Monitor the exchange rate with the CD$.

Yes, that's a good suggestion.

I can understand the ebay comparison, but I'm puzzled by the number of people listing in this complex for double the amount of all the recent sales. Last two sales were in the 50s/60s (about the average for the past year), but currently out of the 12 units for sale, 6 are listed for 115 and up. Totally don't get that.

I had assumed that they were doing as a lot of folks have always done around here--list every tourist season at an outrageous price with no real expectation of selling but willing to let it go if you can find a sucker, but one unit just dropped the price from 119 to 117, which would seem to indicate they might really want to sell it and just have a pie-in-the-sky idea of how much value an ikea kitchen adds. (It is a nice kitchen, but I could copy it for about 7K, and 60K+7K doesn't equal 117K.)

Conchita, ask your agent to ask the seller's agent what the reasoning is behind the rediculous price increase. Then we will all know.

Rosevelt... "increased demad"? Last year, 2011, was the worst year for home sales in the USA since records have been kept. I realize there are a few spots doing better than others, but...

When buyers search on the internet they generally look at properties within a certain price range.

I have read that some realtors will raise the listing price of a property so the property will show up in searches buyers might not have noticed before.

Thanks, dreamgarden. That almost makes sense, but don't they also look at comps? For the asking price on these you can get a lot more, like a newer complex with many more amenities, a better location, a third bedroom, or a garage--and that's assuming you aren't interested in single-family.

ask your agent to ask the seller's agent

Ah, well, that's a slightly sticky point, ncrealestateguy. I don't have an agent yet, and I've dealt with two here. One, last summer when I wasn't looking but went around with a friend who was. That agent was a complete flake--didn't even know the numbering system for the complex so we spent hours driving around just trying to find units and then didn't see any of the more desirable listings, as I discovered afterwards when I started doing my own research.

Then I met the agent who handles most of the listings for this complex at an open house. She has been extremely obliging, even did some research on her own to find answers to some questions I had that she couldn't answer that day (although to be sure they're questions an agent ought to be able to answer, like "how is the second story constructed?"). I'd like to use her as a buyer's agent except for one thing--she persists with the 'property values have turned around and will only go up and it's not a buyer's market anymore' spiel, and I can foresee a lot of resistance to making a low offer when a low offer is reasonable.

Actually, my first choice would be the agent who handles my current rental, who has always been extremely fair and honest, but that firm doesn't deal in that area or price bracket, unfortunately, and I expect they'll be particularly annoyed because my landlord who used to be an agent for them (which is why they do this rental) plans to do a FSBO instead when I leave. This place will list for about three times the cost of the ones I'm looking at.

Well then, call the listing agent up and ask him/her why the price increases are occurring when the comps don't support it. We all would like to know.

nc is right. I have run into the same problem in Sarasota. This is 'season' and the prices are so inflated with nothing to support them. I have been told, 'nothing has sold in the area in the past year and prices have gone up.' I asked the agent, 'if a bank wanted to know what price to lend on a house, how would they determine that?' She said "they would need to move to other surrounding areas."

I told her to send me those comps.

Jane

> call the listing agent up and ask him/her why the price increases are occurring when the comps don't support it. We all would like to know.

There's an open house for the most expensive listing this Sunday. For sure I will ask their agent how they can be expecting double the going price, especially since it's far from the nicest unit currently listed. But I expect to hear, "blah, blah, blah, upgrades, blah, blah," as though the Mills Pride golden oak kitchen and the horrid trailer-parkish screen room actually add value rather than lessening it.

At the last open house, which was only about 30K more than comps, someone actually said, "You couldn't do these upgrades for 30k, you know." It was true. If I had wanted to make my house look like that, I could do it for less than 2K: 6 HD grab and go cabinets (no frivolities like drawer bases or light rail), 9 sq ft of 4" tile, coil stove, two Big Lots vanities with molded plastic tops. Ugh.

When you go to the open house, bring copies of your comps. Tell the agent that you are an interested buyer, but are sincerely confused about the rising asking prices. Show her/him the comps and ask her/him to explain the new price. Then just shut up and listen. If she says that the redo cost xx amount, explain to her that the market does not care about a sellers cost to do something. It has no relationship to the homes value whatsoever. And then ask her/him how the home is going to pass appraisal even if they do get an offer close to asking price. And then ask her/him, if you were to make a solid offer based on recent comps, if the seller would be open to a deal. I bet they would.

Thanks, ncrealestateguy. That's excellent advice, although I'll probably wait on taking it, since I wouldn't want this unit even at a reasonable price. Don't like the location much and it would be a major expense to remove the screen room and repair the walls where it was attached. County appraisal for market value on these units is ~70K. For this unit it's 69.3, and they're asking 120.

Unfortunately the two most recent comps aren't officially posted on the county appraiser's site yet, but I know they were mid-50s and low 60s (unless someone suddenly popped up and offered over asking price for listings that had been languishing for months), and both had similar locations to this unit (facing parking lot rather than the state park).

I'm having to fight down an irrational fear that someone is going to pay high and mess up the comps, even though I know that doesn't matter much right now. It's happened here where I'm renting and the other listings still continue to sit and go down, down, down.