There was an article in the local Island Packet today that discussed home prices rising over the last several months (based on a survey of 20 cities).

I was talking to a client of mine and they said they did not know who to believe; one day the newspaper says that things are getting better and the next day the same paper says that things are getting worse. 

I think it is important to remember that all real estate is local and you should not look at national studies to determine where your local market is. 

I can pretty much guarantee that Hilton Head Island was not included in this 20 city report. 

The real estate market on Hilton Head Island, as in most resort areas, has been slow as inventory increases and sales decrease causing a lowering of prices. 

Just remember, do not look at the national trend – look at the local trend.

One of the Realtors in my office recently had a listing appointment.  During this meeting, they went over all the research showing what the house would sell for in today’s market. 

A couple days later the owners of the property sent a letter to their Realtor saying why they thought their house was worth approximately 15% more than what the research showed.

I read the letter and it was very well written, but they needed to understand that they don’t determine the price of their home.  In a real estate market like today’s, it is important to realize that it is the buyer who determines the sales price.  In a seller’s market, the seller often determines the sales price. 

In a good real estate market the seller determines the price because there are a lot more buyers than sellers in the market.  This makes sense when you think about it like that and it is true with any commodity.  It all goes back to Economics 101 – supply vs. demand.

Someone recently asked me what the most frustrating part of my job as a Realtor was. 

I think it has to be when I try to give people advice based on solid market analysis and they do not listen. 

I asked a dentist friend of mine what the most frustrating part of his job was.  He told me that it was the fact that people would not take his advice.  He would tell a client that they need to have their tooth pulled and they put it off and then they end up calling him in the middle of the night with an emergency extraction. 

I’ve had two sales recently that ended up closing for less than what they had previous offers for.

I guess this is probably one of the hardest parts of a lot of people’s jobs – sometimes people won’t listen, and I think people end up paying more for the advice they don’t take.

My wife and I were in Lexington, Virginia visiting our daughter recently.  We went for a walk to get some coffee and passed by a beautiful home.  It happened to be for sale and we picked up a flyer out of the box out front - it was listed for $1.5 million.  I automatically thought that this house was not worth $1.5 million, especially when the house down the street that was similar was priced at $500,000. 

My wife looked at me and said that there was no way I could know that this house was worth because I was not a Realtor in this area.  Real estate works the same in all areas – there is a pecking order for properties.  You don’t have a lot of buyers in Lexington, Virginia looking for a $1.5 million dollar property on 6.5 acres.

I once went on a listing appointment and the seller told me that they wanted $10 million for their oceanfront home.  I knew there was no way she could get that when her next door neighbor’s home was on the market for $5 million.  She said her house was slightly larger – which it was, and her home had 5 bedrooms rather than 4 bedrooms – which it did, and that the pool was larger – which it was.  These factors; however, did not mean that the house was worth twice as much. 

It sometimes amazes me the price someone will put on a property.

When someone is trying to determine the value of their home, I think it is important to look at the competition.  I often tell people that the price of their house is not determined by me, but that it is determined by the market and the buyers in the market.

I received a phone call from a client asking me to do an updated market analysis on their Hilton Head Island property. 

I told him that the home was probably somewhere around $400,000 in today’s market.  He did not want to list, but he said that if I had a buyer come along who was eccentric and wanted a house like his that he would take $550,000. 

I almost couldn’t believe what he was saying; I wish I could bring him a buyer like that, but I had to tell him that this buyer does not exist. 

Would someone walk into a car dealership and pay $40,000 for a car that was worth $20,000?  Probably not.  The same rules apply for real estate.

We seem to be in a slow real estate market where the number of sellers outnumber the number of buyers. 

I recently spoke to one of my sellers to tell them that we were expecting an offer.  He told me to relay to the purchasing agent not to bring him a “low ball offer”.

I had to tell the seller that it might be, because they have been reading the same newspapers and watching the same news – they know that the buyers seem to be in the driver’s seat at the moment. 

The offer came in and it was less than he wanted, but we were able to negotiate the sale – the buyers ended up paying a little more than he wanted to pay and the seller ended up taking a little less than he wanted to take. 

In a slow real estate market I think it is interesting that a seller expects someone to make an above average offer.  Why would a purchaser pay retail in a slow market.  They have to step back and take a look at the market through a buyers eyes and ask what they would do in that same situation.

I had a call from a client last week who said he wanted to see the three other villas listed for sale in his complex that were listed for sale. 

As his agent, I said I would be more than willing to show him these villas, but what he really needed to do was look at villas in other nearby complexes that were also competing with him.

He called back this morning to say that he did not want to see the others, but only the ones that were competing with him.

I tried to explain to him that in all my years of selling real estate, I have never had anyone walk in my office and say that they are ready to buy a villa in complex “y”.  People will often say that they are interested in buying a 2-bedroom oceanfront villa – show me what is for sale in area.  They end up looking in eight or nine different complexes. 

When you price of your property, you have to look at the entire real estate market rather than just your complex. 

In today’s market, I ask all my sellers to think like buyers.  They need to ask themselves what someone who is looking to buy property would look for and what is the best deal. 

In a slow real estate market, the buyer holds all the cards.

I was talking to a Realtor friend of mine in Chicago the other day.  On Friday she had listed a great property that she was so excited about – it represented a great value and was priced correctly in the market. 

Monday morning, two comparable properties had been reduced in price and the pricing that had been determined on Friday that was correct, was now in fact incorrect.  It was hard to believe that she was right on Friday and wrong on Monday. 

We had to step back and realize that all markets, especially the real estate market, changes from day to day. 

I once had a client who owned a lot in Sea Pines Plantation.  He called to get an updated market analysis on his property and I told him that the lot was worth $600,000. 

Six months later I heard from my client; he was so excited because he had someone offer him $600,000 for his lot and he had signed a contract.  I then told him that his lot at this point was actually worth somewhere around $700,000.  My client was distraught because I had previously told him that his lot was worth $600,000. 

Again, the market changes from day to day.  This is why I think it is important to consult your Realtor regularly as to the value of your property.  Remember, you can be right on Friday and wrong on Monday.

You pay dearly.  I have always said that you pay more for bad advice than you do for good advice.

I once had a client call wanting to list his house.  We went over all of the comparable properties and we came to the conclusion that the property was worth $600,000.  He spoke to another Realtor who convinced him that his property was actually worth $800,000.  Because of the large difference in the two prices, he decided to list with the other agent because he did not want to miss out on $200,000.  

Unfortunately, their property is still listed today – only now they are priced at $550,000.  Not only does he not have his money, but he has now paid for the house to sit empty for over a year.

Another example, I had a $700,000 offer on a property I had listed.  The owners of the home said that they thought the market was turning around and they did not want to take the offer = they thought they could wait and get more money.  After the home sat on the market for a year after that, it sold for $620,000 – they lost $80,000 plus they had to pay to maintain the property for a year. 

As you can see, there are consequences to any decision you make - especially in real estate.