Tuesday, February 26, 2008

Blue Pill or Red Pill?

Neo, This is your last chance. After this, there is no turning back. You take the blue pill - the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill - you stay in Wonderland and I show you how deep the rabbit-hole goes. Morpheus

That quote is from the movie, The Matrix, when Neo is offered a choice of two pills. The blue pill will leave Neo living in the false reality of the Matrix while the red one will show him the truth, reality. I wish that listing agents would include a red pill with every listing presentation. Looking at the majority of asking prices on our MLS today I have to accept that blue pills and false reality are still the overwhelming choice of sellers of real estate. Of the 19 closed condo sales so far this month, the average discount off the most recent asking price was $22,000. With the average selling price at $205,000, the discount amounts to 10%, not bad considering market conditions. However, if we burrow deeper into the rabbit-hole of the listing history of each property we find that the average discount from the original asking price was a whopping $74,000.00. In each case of properties with multiple price drops, the sellers could probably have realized a higher price had they just taken the bitter red pill of reality and priced their property correctly earlier. Taking the analogy one step further, the average difference between original asking price and the last asking price that led to a sale was $52,000.00. That, ladies and gentlemen, is the price of the blue pill of denial. Choose your medicine with care.

MLS inventory Cocoa Beach/Cape Canaveral Feb. 28, 2008

single family homes__137

I regularly get asked why mortgage rates don't drop when the Federal Reserve cuts rates. For a good explanation, read this.

I don't know the future. I didn't come here to tell you how this is going to end. I came to tell you how it's going to begin. Morpheus