I was recently talking to a home owner about why his home had not sold.  I told him he was having some major competition from a bank foreclosure home three doors down from him with about the same size, age and view as his home.  He said that did not matter because it was a bank foreclosure.

It amazes that someone who has enough money to own a house in a development like this would not understand the basic principles of supply and demand.  For example, if a service station had gas priced at $2.99/gallon and the service station right next door had gas priced at $2.49/gallon, guess who is going to sell the most gas.  Assuming the gas is of similar quality, I would guess that the station offering gas at $2.49/gallon is going to sell much more than the station at a higher price. 

This individual did not understand that the market does affect the price of his home.  It has nothing to do with what he paid for the home, what his appraiser said it was worth, what his banker thought it was worth, or what his friends thought it was worth – it only has to do with what the market says it is worth.

It is very obvious to me that nobody is going to pay $1 million for a home when the home two doors down the street is very similar in age, condition, size and view and is priced at $800,000. 

His “so what” was just another way of saying that he did not understand the principles of economics and value.  He did not think that counted because it was a bank foreclosure.  He might like to say that does not count, but unfortunately, it does.

I recently saw a statistic that said 82% of people who bought a house in the last year started their search on the internet.  I thought this number seemed low; it has been my experience over the last year that most everyone I have worked with concerning Hilton Head Island Real Estate has already researched the market and have ideas about what they are interested in.

In the “old days” of Real Estate, clients would come to the office and would tell us what they were looking for, we would make suggestions and then we would go out and look at property.  In today’s “internet age”, clients come into the office, tell us what they are looking for as well as what they would like to see and why.  If we make suggestions they sometimes say that they are not interested in that house as they have already seen it on the internet. 

Information is key and many times the buyer has the same information as Realtors.  In the “old days”, we were the keeper of the information – now, everyone has the information in front of them. 

This means that many times prospects will call the listing agent of a property because they will see it on REALTOR.com; because of this, it very important that you have a proactive Real Estate Agent.  If they call your listing agent and they cannot convert the sale then the sale is lost. 

The internet is also a great tool to determine activity you are receiving on your home via the number of internet hits and showings you receive on your property.

It has been our experience if you are getting a lot of internet hits but no showings then your property is probably priced anywhere from 6%-12% over value.  If you are getting a lot of showings but no 2nd showings, your property is probably priced somewhere between 4%-6% over market.  If you are getting a lot of 2nd and 3rd showings then your property is probably competitively priced and will sell soon.  Very few people look at a home only once and purchase.  Below you will see a diagram that shows this theory.

A client once told me, “my house must not be overpriced – nobody has complained about the price and nobody has looked at it”.  If no one is looking at your property, that means the public has gone online and made a decision – right or wrong – that the house is overpriced and are not even asking agents to look at your property.

One of my clients recently commented to me, “all we have been doing is chasing the market down”.  I had his property listed at $699,000 when the market was about $650,000.  We then reduced to $649,000 and the market had moved to around $600,000.  When we repositioned ourselves at $599,000 the market had moved to $575,000.  We put the property at $569,000 and the market had moved to $550,000. 

He commented that if he had listened to me originally he would not own the property, but he said he was “stubborn” and was trying to squeeze every nickel he could out of the property.  In reality, he had lost money because he was always a day late and a dollar short on pricing.  In our business we call that chasing the market down.  (more…)

Yesterday’s headline in The Island Packet stated “New Deflation Fears Hammer Wallstreet”.  Today’s headline read “Dow Free Falls as Unemployment Rate Rises”.  Wow – you would have to be crazy to purchase with headlines like that. 

That is my exact point – how much nerve do you have?  Are you willing to go against the flow because obviously the flow right now is anyone who would buy anything in today’s market has lot their everloving mind. 

If you look at historical data, it is those people who purchase at the times when nobody else is purchasing are the ones that come out smelling like a rose.  I think of it as - smart money is buying now. 

I recently listened to an interview with Donald Trump who I usually disagree with on most things, but I think he might be right on this.  If you are looking for a great buy, now is a great time to act.  There are several really good bank foreclosures on Hilton Head Island.  You can visit my Hilton Head Island Real Estate website and click on the “foreclosure” tab to get an idea of what is available in the market.  Remember – contrariness usually ends up winning in the long run.

When I was working out this morning at the gym I noticed the financial news and they said that the Dow hit a 5.5-year low yesterday and that new home construction hit an all-time low since they have been keeping records.  The question a lot of people are asking themselves is how this affects the housing market.

The commentator went on to say that there was “fear” and “uncertainty” in the market.  Those are two things that the housing market cannot stand.  When there is “fear” and “uncertainty” people often do not make decisions.  When people are not making decisions, that means there are less sales which causes prices to drop and therefore has a detrimental effect on the market. 

How long will fear and uncertainty remain in the market?  Obviously, that will remain until there is some reason that the public thinks that the market has stabilized.  It is my hope that this will happen soon because it is having a negative effect on property values.

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Following is a chart that shows 10-year averages for the number of Hilton Head Island Real Estate sales from January through October 31st.  In homes, we have a 10-year average of 847 sales and so far this year we have sold 472 homes.  This represents a 44% drop. 

What does this mean?  If you are considering buying property on HIlton Head, this is good news.  This means that in a soft market you can get a much better buy.  It also means that there is a lot more inventory which means you have a better selection. 

It is kind of like walking into a department store and telling them what you are looking for and they tell you that you have four to choose from and they are 20% off.  This is a win-win for anyone looking to buy in today’s market. 

The answer to this question is very simple – when the press gets ready to turn it around.

I picked up Saturday’s paper and the headlines blew me away.  “Retail Sales Plummet”, “Budget Woes Force Layoff at State Agencies” – Wow – all this bad news makes me wonder why anyone would ever buy anything.  I think that is what the press has in mind.

I actually think that now is a pretty good time to buy because you buy when nobody is buying and sell when everybody is selling.  That is my recommendation and I am sticking to it.

Second Semester of 1969 I took my first Economics course – Economics 101.  The only things I remember about the class were that the professor was a nerd, he was extremely boring, we did not have air conditioning in the building and most everyone slept through the class. 

My teacher once said “in business, there is no such thing as a straight line.”  I find this to be absolutely true.

Everyone in Real Estate does not understand this.  When the market was going gangbusters in 2004 and 2005, people were buying everything they could get their hands on because they assumed that property would keep going up 20% per year.  Now that the market has slowed down, nobody is buying because they assume it is going to go down 20%-25% per year.

People have it backwards – they buy when they should not buy and do not buy when they should.

If you think property is going to go down 25% a year for the next 5 years, then I suggest if you truly believe that, you would be crazy to buy in this environment.  However, remember, there is no such thing as a straight line.

The opportunities available for someone looking for a good property on Hilton Head Island today are outstanding.  We have motivated sellers, prices have dropped, and we have great selection.  It is the perfect storm in which to sell in.

A famous person once said, “It is not the strongest of the species that survives, nor the most intelligent, but the one most responsive to change.”

No matter what anyone says, you can never know too much about Real Estate, especially when it comes to the changing market we are now experiencing. 

My team attended a special STARPOWER seminar yesterday in Charlotte, North Carolina where they heard from peak producers in different markets including Florida, South Carolina, Illinois, Indiana and Washington D.C.

Our #1 goal is the be the best we can be in our existing market and adapt to the changes that are happening around us.  I think through this seminar we became more motivated and learned some new techniques to endure current market conditions.  We are working hard to stay ahead of the curve to meet all your Real Estate needs.

*Information courtesy of STARPOWER