Tuesday, August 29, 2006

Terminal Seller Uniqueness – The Vineyard Way?

I’ve always believed Martha’s Vineyard to be a unique and very special place, but I try to keep my elitist attitude in check. However, for as long as I can remember, when prideful owners compare properties, they boastfully maintain their property is special and unique. It's quite common when we see properties selling for over 20 million dollars, usually the first thought that comes to mind is, and “They paid that much for that property!” And then after thoughtful reflection we come to the (ir)rational conclusion, if he can get that much for his property, surely mine is worth X. No two properties are the same and the same goes for buyers, circumstances and timing. Each property must be evaluated individually and objectively. I see it all the time in the middle to lower end of the market based purely upon what is happening in the higher end of the market. Certain areas will appreciate more quickly than others since it all comes down to location, but there are many other dynamics that effect how the various price lines are marketed.

Vineyard property owners generally believe they are not affected by what is going on in the rest of the market, they think their holdings are recession proof. To some extent that may be true. But today it seems all we’re hearing from the media is the bubble has burst. Of course the news media survives on sensationalism and fear. They don’t know our business and quite often editorialize to suit themselves. The market is crashing in many areas and down trending in other areas where the experts have predicted a soft landing. All the while the market is building in other areas. We cannot deny the fact that the inventory of homes on Martha’s Vineyard is steadily increasing and sales have fallen off significantly, but this is not a bubble burst, it is suppose to be a leveling of prices into what will be a healthier market --- except for one thing.

I like the recent article Peter Miller wrote titled Marathon Sellers Race Realty where he speaks of that one thing --- real estate exceptionalism. I think we all know history repeats itself and if that is true, in this case, sellers who resist reality as we approach the long cold winter may get themselves into trouble, especially if they’re highly leveraged, in a position of negative amortization and with ARM’s that will realize dramatic interest rate hikes during first adjustments sometime before March 2007. Sellers are shooting themselves in the foot every week by making insignificant and repeated reductions to their over-priced properties, that is, overpriced for this market. As a result, serious buyers who watch every tick of our market continue to sit back intent upon waiting out the sellers, wondering how low they will go. In the meantime sellers are paying all those carrying costs and chasing the market as it continues to slide. This is not as bad as the early 90’s but I fear the outcome may be the same. My advice to sellers is, listen to the objective professional opinion of a seller agent. Sellers have got to stop telling their agents what their property is worth. If you are engaging them to market your property, let them do their job. LISTEN! If you’re fortunate enough to get an Offer, think carefully and MAKE THE DEAL. What you perceive to be a low offer today may end up looking like a high offer in the next few months.


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