brickor mortis n. Falling house prices have caused property website Rightmove to coin a new phrase. “Brickor mortis” is the paralyzing condition caused by sellers refusing to lower prices as they don’t accept their home’s value has dropped. Buyers won’t buy as they think homes will be cheaper in the future-or because they can’t get a loan. -“Revealed: Middle Britain will be hardest hit by falling house prices” by Becky Barrow Mail Online (United Kingdom) July 18, 2008.
Susan’s First Rule of Real Estate Sales - “if it hasn’t sold in 75 days, it’s priced too high.”
If you’re working mostly in areas where properties get snapped up nearly as quickly as they hit the market - great!
One could call this a schizophrenic marketplace, where lots of “spec” properties that have gone up and sold in the last five years are not selling, and other neighborhoods are like wildfire.
What’s the difference?
Well, yes, it’s location (location location, I had to do it.) It’s also the difference between neighborhood characteristics - how well the neighborhood has been kept, the ethnic diversity in the neighborhood and whether it’s primarily new construction.
My Realtor friends are telling me that they are encountering a lot of “brickor mortis” when they consider advising clients about making an offer - properties are listed higher than the comps will support, and yet the listing parties are dead set on the value that they’ve established. While that strategy may work in the 750,000+ arena, it’s a great way to sit on a property for months or longer in markets where homes are just commodities.
How do we deal with this market schizophrenia? By advising more aggressive pricing in lower neighborhoods - offering down payment assistance and closing cost programs in more diverse neighborhoods, and working with clients on understanding that whimsy will inhibit the sale of their property.
In my own experience over the last two weeks, I’ve seen a well priced house in the Southwest languish in a diverse and transitional neighborhood until a recent sale of a foreclosed property came in nearly 20% lower than the asking price of the subject property. I’ve talked to a well educated non-real estate professional who was convinced he knew the market and was just dead wrong about all of his assumptions. And, I’ve seen a friend taking his time thinking about which properties to visit in the neighborhood of his choice, and in less than 24 hours, every single property on his list went from “available” to “option pending.”
There is no blanket way to deal with this market. Focusing on your core strengths, educating clients thoroughly, and doing your research and homework are the only things that can be relied on. It may be time to focus on your consulting relationship with the client and speaking to them more in terms of what you’re seeing the market doing and how it affects them, than just agreeing to their assumptions and wishes.