I thought by this point in the cycle that most property sellers would have come to terms with the new conditions in our real estate market. Not so. There are large numbers of owners who are clinging to a 2005 reality. If you're trying to sell a property you may want to get a second opinion if you've caught yourself saying any of the following:
* I won't sell for less than my payoff.
* I'll just hang on to it until I get my price.
* I'll wait for the market to turn around.
* I need to clear enough to (fill in the blank).
* I'll just rent it until the market turns around.
* My neighbor got $X for their's.
People, these are all forms of denial. It is what it is. What your condo was worth in 2005 has no bearing on what it's worth in 2007. The unfortunate reality is that we had an unsustainable run-up in prices and they have reversed direction. This is true in most markets in the United States. There are many factors contributing to the decline. In my opinion, the biggest factor is the decline itself. The thousands of investors who were buying property strictly for the appreciation have disappeared along with their exotic, easy-to-qualify-for mortgages. There are still buyers in our marketplace but they are buying to move into and they know they're in the driver's seat. If you aren't flexible, they'll just go to your neighbor who may have moved past his denial and transitioned into a let's-do-a-deal mentality. If you want to sell your property, take this reality check.
* What are similar properties being sold for today?
* What is it costing me every month that I hold on to it?
* What is it likely to be worth a year from now, two years?
There is the possibility that this market will turn around and take off again soon. I think that is unlikely considering inventory levels and changes in the mortgage market, but, as always, I could be wrong. If you disagree and are willing to take that chance, hang on. Consider that your taxes and insurance in our county will run somewhere around 2% to 3% annually not including lost opportunity on the equity. Add mortgage interest to that and a $500,000 property with an 80% mortgage will cost around $40,000 per year excluding any tax benefits with no repairs or maintenance while waiting out the downturn.
I have been involved in 3 deals in the last 2 weeks in which the sellers had been trying to sell for at least a year but were hanging on to unrealistic prices. Had they priced aggressively earlier they could probably have sold for more. Denial carried a heavy cost in these cases.
My point here is to be realistic with your pricing if you must sell. Talk to someone who is knowledgeable and willing to tell you the truth about the market and price to sell. If you're looking to buy, there are some incredible deals to be had if you're looking for a place here. Even though double-digit appreciation is unlikely to resume anytime soon, this is still a magic little beach town with friendly residents and an abundance of natural beauty. We welcome new neighbors who will come to love this special part of Florida like we do.
I'll leave you alone on a beautiful day at a park in south Cocoa Beach waiting for the manatees and dolphins. Picnic anyone?